Wealth management firms may serve clients whose financial planning includes trusts, estates, beneficiary arrangements, charitable structures, or multigenerational planning. These situations can involve ongoing fiduciary and administrative responsibilities in addition to investment management.
Trust support for wealth management firms may provide access to trustee and trust administration services through a separate trust company. The appropriate structure depends on the firm's services, the client's circumstances, and the responsibilities established in the governing documents.
What Can Trust Support Include?
Trust support can take different forms depending on the relationship. Services may include:
Corporate trustee services
Trust administration
Estate settlement
Beneficiary administration
Distribution administration
Recordkeeping
Fiduciary oversight
The trust company's responsibilities should be defined by the applicable trust documents and agreements.
Members Trust Company provides trust and estate services and works with financial professionals in connection with trust-related needs.
How Can a Trust Company Work With a Wealth Management Firm?
A wealth management firm may continue providing investment management or financial planning services while a trust company handles fiduciary responsibilities assigned to it.
For example, the wealth management firm may provide investment advice within its existing advisory relationship, while the trustee administers distributions and maintains trust records.
The parties may need to coordinate when trust administration and investment management intersect. The specific process depends on the agreements and responsibilities of each organization.
Why Is Role Definition Important?
A client with a trust may work with several professionals, including a wealth manager, trustee, attorney, and tax professional. Each professional may have different responsibilities.
Before a trust relationship begins, the parties should establish who is responsible for:
Investment management
Trust distributions
Beneficiary communication
Trust accounting and records
Tax-related information
Legal matters
Reporting
Other administrative functions
The client should also understand whether the trust company and wealth management firm have separate agreements and fees.
What Should Wealth Management Firms Evaluate?
Firms considering trust support for wealth management firms may evaluate:
Fiduciary structure
Trustee responsibilities
Scope of administration
Reporting and recordkeeping
Communication procedures
Technology
Client onboarding
Coordination with attorneys and tax professionals
Fees and administrative costs
It may also be useful to establish how the trust company will communicate with the firm's existing client service team.
When Might Trust Support Be Relevant?
Trust support may be relevant when a client has an existing trust, needs a corporate trustee, requires ongoing trust administration, or has an estate plan involving fiduciary responsibilities.
A separate trust company may also be considered when the firm's existing service structure does not include trustee or trust administration functions.
The appropriate arrangement depends on the client and the governing documents.
Conclusion
Trust support for wealth management firms may provide trustee and administrative services through a separate fiduciary relationship. For firms considering this type of arrangement, the responsibilities of the wealth manager, trustee, attorney, and tax professional should be clearly established.
Members Trust Company provides trust and estate services and works with wealth management firms and other financial professionals. Firms considering trust support should review the proposed structure, responsibilities, fees, and applicable requirements with appropriate professionals.
FAQ
What is trust support for wealth management firms?
It may include trustee services, trust administration, estate settlement, beneficiary administration, and other fiduciary or administrative functions.
Can a wealth management firm continue managing investments?
Depending on the arrangement, the wealth management firm may continue providing investment management while the trust company handles its assigned fiduciary responsibilities.
Who administers trust distributions?
The trustee generally administers distributions within the authority provided by the governing documents.
What should a wealth management firm ask a trust company?
Questions may cover fiduciary duties, service scope, reporting, communication, fees, technology, and coordination with the firm's existing services.
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.
