Trust Services

Trusts typically focus on protection. And it is this more traditional “protection” aspect that is often cited by those who emphasize extensive use of trusts in estate planning.

Traditional reasons for using trust:

  • Protecting beneficiaries against their own lack of experience, either in investing or with unscrupulous advisors.
  • For a person with disabilities
  • Protecting beneficiaries from others, primarily creditors.
  • Protecting beneficiaries from each other. The grantor may want to benefit two or more beneficiaries who don’t get along or may not get along in the future.
  • Protecting trust assets from division in a divorce action. In community property states, keeping inherited assets in a separate trust will help avoid having those assets commingled with the community assets.
  • Allows for joint asset management. While ownership and joint management can be worked out using structures like corporations, partnerships, and limited liability companies, trusts may be important when minors are involved or when unified management oversight is required.
  • Protecting beneficiaries from the IRS. Such trusts are established to be exempt from estate, gift, and generation skipping transfer taxes.

Distribution Options

Distribution provisions can be divided into two main subsets: Objective and subjective. Objective provisions are more restrictive and leave little room for a trustee to be over-indulgent. Subjective provisions require a trustee to exercise discretion in carrying out the grantor’s intentions.

Administrative Trustee Services

When your clients want to create a trust as part of their estate planning, they are often challenged to decide who will serve as trustee and/or successor trustee on their trusts. Many of your clients have strong, long-term relationships with their investment advisers and would like to maintain continuity of investment management as assets are passed on to the next generation in trust.  With Administrative Trustee Services, exclusive investment discretion is granted to the investment adviser and Austin Capital is appointed to serve as the administrative trustee in the trust document. Though Austin Capital requires that Nevada law govern trust administrative provisions, validity and construction may continue to be governed by the laws of other states.

Aligning Priorities

When creating a trust, thought must be given to expressing the grantor’s wishes. This precatory language is nonbinding, stating preferences or purposes of a trust to help guide the trustee’s decisions. This can help provide important guidance on how much or little control and involvement is afforded to the beneficiary.

ERISA Directed Trustee Services

Most corporate trustees act as “directed trustees,” so other fiduciaries bear responsibility for the investment decisions.  And in most qualified plans, assets are custodied through a mutual fund company, an insurance company, or stock broker, further limiting the trustee’s role. But considering the “value added” offered by a corporate trustee, a plan sponsor should consider the tangible and intangible benefits furnished by an external trustee. Further, the plan sponsor should also consider the mitigation of potential fiduciary liability afforded by having an independent third party act as trustee.

Who Should Be In Charge?

Trustee selection is a critically important part of the estate planning process. There is no trust that is so well-written that it can ensure against trustee mismanagement. A determination between using an individual or corporate trustees is needed to ensure proper trust management.

What Are The Next Steps?

A well-crafted estate plan is a snapshot of your legacy. Taking time to map out a wealth transfer strategy and then clearly communicate that strategy to beneficiaries early is critical, so that all of the decisions are in your control.