Credit unions may have members whose financial needs eventually include trusts, estates, beneficiary arrangements, or ongoing fiduciary administration. These services can involve responsibilities that differ from traditional banking and financial services.
Credit union trust may provide a structure for addressing these needs through a relationship with a separate trust company.
What Is a Credit Union Trust Partnership?
A credit union trust partnership generally involves a credit union working with a trust company to provide trust or fiduciary services. Depending on the arrangement, the trust company may serve as trustee or provide other trust administration services.
The specific responsibilities of each organization depend on the partnership structure, applicable requirements, and agreements governing the relationship.
Members Trust Company is one example of a firm that works with credit unions in connection with trust and estate services, providing a trust company resource within a credit union relationship.
Why Might a Credit Union Work With a Trust Company?
Trust administration can involve fiduciary responsibilities, recordkeeping, beneficiary communication, distributions, estate settlement, and other ongoing administrative functions.
A credit union may determine that working with a trust company is appropriate when members need services that fall outside the credit union's existing service structure. The arrangement can allow the organizations to maintain defined roles while addressing the member's trust-related needs.
Credit unions considering this type of relationship should evaluate the applicable regulatory, operational, and fiduciary requirements.
What Trust Services May Be Available?
Depending on the trust company and partnership, services may include:
Corporate trustee services
Trust administration
Estate settlement
Beneficiary administration
Distribution administration
Trust recordkeeping
Fiduciary oversight
Investment management, where applicable
The availability of specific services depends on the trust company, the governing documents, and the nature of the engagement.
How Does the Partnership Affect the Member?
A member may continue working with the credit union for existing financial services while having a separate relationship with the trust company for fiduciary services.
It is important for the member to understand which organization is providing each service and which entity has fiduciary responsibility. Communication among the credit union, trust company, financial advisor, attorney, and tax professional may also be appropriate depending on the circumstances.
What Should Credit Unions Consider?
Before establishing credit union trust partnerships, a credit union may evaluate:
The trust company's fiduciary structure
Services and responsibilities
Regulatory requirements
Communication procedures
Technology and reporting
Member onboarding
Fee arrangements
Coordination with existing financial services
The partnership agreement should clearly establish the responsibilities of each organization.
Conclusion
Credit union trust partnerships may provide a structure for offering trust and fiduciary services through a dedicated trust company. The appropriate arrangement depends on the credit union's needs, the trust company's services, applicable requirements, and the member's circumstances.
Members Trust Company provides trust and estate services and works with credit unions in connection with trust-related needs. Credit unions considering a partnership should review fiduciary responsibilities, service arrangements, and regulatory considerations with appropriate professionals.
FAQ
What are credit union trust partnerships?
They are arrangements in which a credit union works with a trust company to provide trust, fiduciary, or related administrative services.
What services can a trust company provide?
Depending on the arrangement, services may include trustee services, trust administration, estate settlement, beneficiary administration, and recordkeeping.
Does the credit union remain involved?
The credit union may continue providing its existing financial services while the trust company handles its assigned fiduciary responsibilities.
What should a credit union evaluate before partnering with a trust company?
Relevant considerations include fiduciary responsibilities, regulatory requirements, service scope, communication, technology, reporting, and fee arrangements.
This article is provided for educational purposes only and does not constitute legal, tax, accounting, or investment advice. Trust, estate, retirement, and tax considerations vary based on individual circumstances and applicable law. Investment products and services are not deposits or obligations of, and are not guaranteed or endorsed by, Members Trust Company, any credit union or government agency. They are not federally insured and are subject to investment risk, including possible loss of principal. Readers should consult qualified professionals regarding their specific circumstances.
Trust services provided by Members Trust Company, a federal thrift regulated by the Office of the Comptroller of the Currency. Trust and Investment products are not NCUA/NCUSIF/FDIC insured. May lose value including the possible loss of principal. No financial institution guarantee. Not a deposit of any financial institution. This is for informational purposes only and is not intended to provide legal or tax advice regarding your situation. For legal or tax advice, please consult your attorney and/or accountant.
