Trust administration is an important aspect of financial and estate planning, particularly for Registered Investment Advisors (RIAs) whose clients may use trust structures as part of their planning strategy. Understanding how RIAs coordinate with trust companies can help clarify the roles involved in administering a trust.
RIAs typically provide investment advisory services and educational information related to client assets, but they are not trust companies and generally do not establish or administer trusts. Instead, RIAs often work with professional trustees when a client requires formal trust administration.
Members Trust Company is a trust company that may establish and administer trusts and may work with RIAs whose clients require trustee and trust administration services.
The Role of RIAs in Trust Planning
RIAs may help clients understand how trusts are commonly used in financial and estate planning. This educational role may include discussing general trust structures, reviewing trust documents with clients, and coordinating with attorneys or trustees when appropriate.
While RIAs may help clients understand trust provisions and investment considerations, they do not typically perform the legal or administrative duties of a trustee. Instead, RIAs may help clients identify when professional trust administration may be appropriate and coordinate with a trust company that provides trust administration when needed.
The Role of a Trust Company in Administration
A trust company serves as the trustee responsible for administering a trust according to the terms of the governing trust document. Trustee responsibilities may include maintaining records, administering distributions, and administering the trust according to the trust’s provisions.
Members Trust Company is a trust company that may establish and administer trusts and provide trustee and trust administration services. In this role, the trust company carries out administrative responsibilities associated with the trust while coordinating with advisors and other professionals involved in the client’s financial planning.
Coordination Between RIAs and Trustees
When a trust company serves as trustee, RIAs often work alongside the trustee to support the client’s broader financial planning strategy. This coordination may include:
Reviewing trust provisions
RIAs may help clients understand how trust provisions relate to their broader financial planning considerations.
Investment oversight
RIAs may manage trust investment portfolios when permitted by the trust agreement and coordinated with the trustee.
Professional collaboration
RIAs may coordinate with trustees, attorneys, and tax professionals to help coordinate trust administration with the client’s broader planning considerations.
This collaborative approach allows each professional to focus on their area of responsibility.
Record-Keeping and Administrative Responsibilities
Administrative responsibilities for a trust are typically handled by the trustee. These tasks may include maintaining trust records, administering distributions according to the trust document, and coordinating reporting processes.
When a professional trustee such as Members Trust Company administers a trust, the trustee is responsible for following the trust agreement and maintaining administrative processes associated with the trust.
RIAs may remain involved by monitoring investment allocations and coordinating with the trustee regarding financial planning considerations.
Communication with Beneficiaries and Advisors
Trust administration often requires clear communication between trustees, advisors, and beneficiaries. Trustees typically manage administrative communication related to trust distributions and reporting, while RIAs may discuss investment considerations with clients.
This coordinated approach can help maintain transparency while ensuring each professional fulfills their responsibilities within the trust structure.
Why Collaboration Matters
Trust administration often involves several professionals working together. RIAs contribute financial planning insight and investment guidance, while trust companies provide the authority and structure required to establish and administer trusts.
By working with a professional trustee such as Members Trust Company, advisors can coordinate with a trust company that provides trust administration while maintaining their role as financial advisors.
Conclusion
Trust administration requires coordination between multiple professionals. RIAs typically provide investment management and guidance about trust structures, while trust companies perform the formal role of establishing and administering trusts.
Members Trust Company is a trust company that may establish and administer trusts and may work with RIAs whose clients require trustee and trust administration services. Through collaboration between advisors and trustees, clients can receive both financial guidance and professional trust administration administered according to the terms of the trust.
This material is provided for informational purposes only and does not constitute legal, tax, or investment advice. The services described are subject to applicable laws, regulations, and governing agreements. Institutions and individuals should consult their legal, tax, and financial advisors before implementing any structure or strategy.
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.
