ADVISER-MANAGED
TRUST SERVICES
At the Heart of any Estate Plan is a Trust
Trusts are versatile planning tools that allow you to direct how your assets are managed during your life and upon your death. As written legal arrangements, trusts allow you to appoint a person or corporation (called the “trustee”) to administer and distribute assets based on your wishes. And trusts aren’t just for the very wealthy; they can be useful to many individuals who have investments, real estate, life insurance policies, or other assets to pass on to future generations.
Establishing a trust can provide many advantages, including:
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Providing for Beneficiaries. Trusts are an excellent and efficient way to realize your estate planning goals. Whether you want to pass assets to your children, fund your grandchild’s college education, or support a charitable organization, trusts can enable you to accomplish these and other objectives.
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Preserving Control. A trust can help you build a legacy that can endure for many generations, allowing you to decide how and when your assets are distributed. You may, for example, ensure young or financially unsophisticated heirs are provided for, secure an inheritance for children from a previous marriage or set aside assets for grandchildren or great-grandchildren.
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Avoiding Probate. Assets in most trusts avoid the costs, time delays and publicity of probate.
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Planning for Taxes. Trusts may help reduce the tax liability generated by transferring an estate.
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Protecting Assets. Certain trusts allow you to protect your assets from the claims of creditors. The reasons to establish a trust are as individual as you are. You can choose from among various types of trusts, depending on your circumstances and goals. Your attorney or estate planner can help identify the best type of trust for you.
Selecting the Right Trustee
A trustee is the person or corporation responsible for administering your trust assets according to the terms you outline in your trust. Choosing a trustee is a significant decision. Although you can designate almost any individual to oversee the administration and distribution of your assets, even financially sophisticated individuals or family members often find managing a trust a complex and burdensome experience.
Having a family member act as trustee often damages relationships
Unfortunately, the traditional wealth transfer process is flawed. Too often, a family member is asked to serve as a trustee without regard for the responsibility required of that individual or the strain that responsibility often causes on family relationships.
Most families lose their wealth by the third generation
When heirs receive money without prior coaching on the purpose of money, they will seldom take the time to understand the values that helped accumulate the value of the inheritance. Without a clear understanding of the blood, sweat and tears involved in the accumulation of wealth, heirs often lack the sophistication and motivation to properly manage such a financial windfall. Not surprisingly, studies find that 60% of families have completely spent their inherited wealth by the end of the second generation. By the end of the third generation, 90% of families have no inheritance left(1).
(1) Source: “Intentional Wealth: How Families Build Legacies of Stewardship and Financial Health” by Courtney Pullen, 2013.
Advantages and Disadvantages of a Traditional Corporate Trustee
Advantages
Choosing an impartial corporate trustee offers several benefits, including:
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Experience. In the trust business, corporate trustees handle many trusts on a daily basis and are familiar with legal and government requirements. They understand the intricacies of a wide range of trust types and can service them efficiently and accurately.
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Regulation. A corporate trustee understands the many rules, regulations, and procedures essential to administering a trust and ensures that they are correctly followed.
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Reliability. Administrative functions are not interrupted due to vacations, illnesses or other disruptions that may distract a personal trustee from carrying out trust responsibilities.
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Objectivity. A corporate trustee will objectively carry out your wishes as described in your trust agreement and remain impartial.
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Record Keeping. Administering a trust involves many responsibilities, including filing tax returns, issuing regular statements and keeping records of trust account activity. Family members or other appointed individuals may find these overwhelming and too time consuming.
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Longevity. Unlike an individual trustee, a corporate trustee will not predecease you or otherwise be unable to administer the trust.
Disadvantages
Unfortunately, there are several disadvantages to utilizing a traditional corporate trustee. Many corporate trustees traditionally accept trusteeship only if they assume all fiduciary responsibilities and control – they take over the administration and safekeeping, as well as the investment management of trust assets. Corporate trustees that assume investment management responsibilities often do not have investment flexibility, and the range of available investments may be limited to proprietary mutual funds. This creates an inherent conflict of interest; the corporate trustee can only recommend what they sell, not necessarily what’s in the client’s best interest.
Moreover, corporate trustees that manage investments are able to assign and reassign their own trust investment manager. Each time, the new investment manager will need to become acquainted with your history, risk tolerances and needs, and may not have a view of your entire financial picture.
Solution: Utilize Atomi for Your Adviser-Managed Trust
Atomi Financial Group’s Adviser-Managed Trust solution offers all the benefits of a corporate trustee, but with an important distinction: you can appoint your Atomi Personal Strategist to continue to manage your trust assets.
You’ll feel reassured knowing the adviser who is familiar with your history, risk tolerances, and financial dreams is there to help you address your short- and long-term goals, while a corporate trustee carries out the administrative duties of the trust, including: safekeeping of assets, making distributions to beneficiaries according to the terms of the trust, filing tax returns, and issuing regular account statements.
In addition, incorporating your trust assets into your overall financial plan can enable your portfolio to be managed to its greatest potential – taking advantage of tax efficiencies, creating a truly diversified portfolio, and best meeting your risk and return objectives.
Atomi’s Adviser-Managed Trust accepts most investments, including mutual funds from most fund families, stocks, bonds, and other marketable securities, thus giving your adviser the investment freedom necessary to select the assets that he or she believes best meet the trust's objectives.
Also, with a traditional corporate trustee the new manager will need time to learn and understand your history, risk tolerance and specific financial needs – details your Atomi Personal Strategist already knows well based on your existing relationship.
Is an Adviser-Managed Trust Appropriate for You?
Ask yourself the following questions. If you’ve answered “yes” to one or more, you should consider Atomi’s Adviser-Managed Trust services:
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You want to create a lasting legacy
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You don’t want to risk family members arguing over inherited wealth
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Your beneficiaries don’t have the time, financial sophistication, or interest in managing inherited wealth
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You have minor children or a large extended family
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You want a professional adviser to teach inheritors the value of money
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You don’t want limited investment choices in your trust
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You want a single point of contact to help manage all of your assets
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You want to choose who manages your investments
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You desire a high level of service regardless of account size