A wealth management firm may have clients whose financial planning includes trusts, estates, retirement assets, or multigenerational arrangements. As these structures become part of the client relationship, the firm may need to coordinate with a trustee or trust company.
Trust support for wealth management firms can take several forms. The appropriate arrangement depends on the firm's existing services, the client's circumstances, the governing documents, and the responsibilities assigned to each professional.
Where Does Trust Support Fit?
Trust administration can involve responsibilities that are distinct from investment management and financial planning. Depending on the engagement, a trustee may administer distributions, maintain records, communicate with beneficiaries, and carry out other duties established by the trust documents.
A wealth management firm may continue providing investment or planning services within its existing relationship.
The distinction is important because each professional has a defined role. Legal and tax matters should be handled by appropriately qualified professionals.
What Can a Trust Company Provide?
Depending on the engagement, trust company services may include:
Corporate trustee services
Co-trustee services
Successor trustee services
Trust administration
Estate settlement
Beneficiary administration
Fiduciary recordkeeping
Members Trust Company lists corporate trustee, co-trustee, executor or personal representative, and guardian or conservator services among its trust and estate offerings.
The specific services available depend on the applicable engagement and governing documents.
How Can Firms Integrate Trust Administration?
Integration starts with clearly defining responsibilities. A wealth management firm may establish procedures for communicating with the trustee and determining which information should be shared.
Coordination may involve:
Investment information
Distribution requests
Beneficiary updates
Trust reporting
Changes in client circumstances
Requests from attorneys or tax professionals
The process should reflect the applicable agreements, privacy requirements, and responsibilities of each organization.
What Should a Wealth Management Firm Review?
Before establishing a trust relationship, firms may want to review:
The trustee's fiduciary capacity
Scope of trust administration
Investment responsibilities
Distribution procedures
Beneficiary communications
Reporting and recordkeeping
Technology and document management
Fees and administrative costs
Coordination procedures with outside professionals
It may also be useful to establish who the client should contact for specific questions.
How Does the Existing Advisor Relationship Continue?
Adding a trustee does not necessarily change the client's existing advisory relationship. Depending on the arrangement, the wealth management firm may continue providing investment management or financial planning while the trust company performs its assigned fiduciary responsibilities.
Members Trust Company works with financial professionals and identifies wealth management, trust and estate services, and planning solutions among its offerings.
The client should understand the separate responsibilities and agreements involved.
When Might a Firm Consider Additional Trust Support?
Trust support may be relevant when a client needs a corporate trustee, successor trustee, ongoing trust administration, estate settlement, or another fiduciary service outside the firm's existing structure.
The appropriate arrangement should be considered in light of the trust documents and the client's circumstances.
Conclusion
Trust support for wealth management firms can involve trustee services, trust administration, estate settlement, and coordination with an existing advisory relationship. Firms considering this type of structure should define responsibilities, communication procedures, fees, and the roles of other professionals.
Members Trust Company provides trust and estate services that can be incorporated into relationships involving wealth management firms and financial professionals. The appropriate structure depends on the client's circumstances, governing documents, applicable agreements, and law.
FAQ
What is trust support for wealth management firms?
It can include trustee services, trust administration, estate settlement, beneficiary administration, and other fiduciary responsibilities.
Can a wealth management firm continue managing investments?
Depending on the arrangement, the firm may continue providing investment advisory services while a trust company handles its assigned fiduciary duties.
What should a firm ask a trust company?
Questions may address fiduciary capacity, administration, distributions, reporting, communication, investment responsibilities, fees, and coordination procedures.
Can a trust company work alongside an existing advisor?
Yes. Depending on the arrangement, a trustee and financial advisor may have separate responsibilities and coordinate within the authority established by the governing documents.
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. Trust and fiduciary services are subject to review, acceptance, applicable law, governing documents, and Members Trust Company's policies and procedures. Investment products and services are not deposits or obligations of, and are not guaranteed 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.
