Trust & Investment Services Overview : simplebooklet.com

© 2024 M.A. Co. All rights reserved.1Do You Have a Plan for Managing Your Wealth? Are you satisﬁed with it?The quality of the plan you’ve developed will have a lasting impact on your nancial security and peace of mind and that of your family. It’s not something that you should handle alone. In the increasingly unpredictable world in which we live, your wealth management plan needs the steady, stabilizing inuence of a corporate duciary, such as us.What is a “corporate duciary”? That’s the legal term covering our services as trustee and during estate settlement. What can a corporate duciary do that other investment advisors can’t? That’s the purpose of this guide, to introduce you to our services and the ways in which you and your family may benet from them. Don’t expect any of these services to be exactly right for you, because these are necessarily general summaries. Your trust-based nancial plan will need to be tailored to your family’s unique needs and objectives.Please call upon us at your earliest convenience to learn more.CONTENTSInvestment Management Account ..........................2Living Trust ..............................................3Trust Protection for a Surviving Spouse ......................4What to Look for in Your Trustee ............................6Business Succession Planning .............................10Special Needs Trusts .....................................11IRA Rollovers ...........................................12Asset Protection for Your Grandchildren ....................12Estate Settlement .......................................13Charitable Trusts ........................................16Our Invitation to You .....................................16

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Goals, Strategies and TacticsAcquiring wealth is one thing; conserving and managing wealth wisely is another. Many auent individuals lose track of where they stand and where they’re going. They either underestimate their resources or fail to make full use of them. Opportunities remain unexplored, and risks go unrecognized.Financial planning and wealth management assistance are an integral part of our emphasis on helping families derive all possible benet from their nancial resources, now and through the years to come. Where will and trust revisions or other legal matters are involved, our representatives work in close consultation with each customer’s own attorney and other advisors.Among the questions that might come up in an initial planning session are: Are you satised with your nancial preparations for retirement? Does your investment portfolio suitably balance income, growth opportunities and risk? Do you own special assets, such as a closely held business or investment real estate, that require special estate planning measures? Does your long-range property planning take advantage of current opportunities to reduce the impact of federal estate taxes? Will your beneciaries gain full benet from the resources you can provide?Investment Management AccountBENEFIT: Full-time supervision of your portfolioWhen you open an Investment Management Account with us, we draw upon our sources of research and analysis to manage your money. In a sense, we become your institutional investor, which helps to avoid the pitfalls of reactive, emotional investing.The buy and sell decisions that we make for your account—or if you prefer, the recommendations submitted for your approval—represent our independent judgment of the best 2 3course of action for your portfolio, given your objectives, risk tolerance and the market outlook. To open an account, you sign a simple agreement designating us as your agent and deliver the assets that you wish us to manage. You continue to own your securities, and you may add or withdraw funds or terminate your account at any time. Living TrustBENEFIT: Now and future management for family funds, continuous ﬁnancial protection, probate avoidanceSimilar in its immediate benets to an Investment Management Account, a revocable living trust oers added long-range planning advantages.Because we act as your trustee rather than merely as your agent, you may arrange to have us take on broad responsibilities for managing your nancial aairs. From a practical standpoint, each trust client has just as much investment control as he or she wishes. Typically, we provide professional management or investment guidance tailored to each client’s needs and preferences. Some of our clients start o by managing their trust investments themselves, reserving the right to delegate investment responsibility to us in the future.Our role is clear. We follow the client’s instructions, as set forth in the written trust agreement, consistent with all applicable laws and duciary duties. There is no doubt that the client stays in control. Any client who becomes dissatised with our service is free to terminate the trust or change trustees.Beyond control over the trust, our clients gain better control over their lives, a type of control that only a trust aords.IN CASE OF INCAPACITY. No one can escape the risk

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54of an incapacitating illness or injury. When that occurs, others necessarily must take control of your nances. A living trust can allow the trustee to act on your behalf. The trust agreement can spell out the ground rules, how you want things handled. Without a trust, it’s the Probate Court that decides who takes over in the event of incapacity, and then the ground rules are set forth in the law.FINANCIAL PRIVACY. Revocable living trusts make a highly adaptable framework for long-range family security planning. Any trust provisions that might be made for your family by your will can be made through a living trust. However, unlike a will, a living trust agreement normally does not go on public record at a person’s death. Family privacy is preserved.Trust Protection for a Surviving SpouseBENEFIT: Lifetime income, free from investment management concernsA trust for your spouse, if you’re married, can provide reliable nancial support if he or she survives you. With a trust, professional investment management is built right in—an important consideration if the beneciary lacks investment expertise. Generally speaking, there are three approaches to be considered.TRADITIONAL MARITAL TRUST. To qualify for the federal estate tax marital deduction, a trust must pay all of its income to the surviving spouse at least annually. With the traditional marital deduction trust, the spouse also has the power to alter the ultimate disposition of trust assets, typically through specic instructions provided in his or her will.QUALIFIED TERMINABLE INTEREST PROPERTY TRUST (QTIP TRUST). However, the spousal power to direct the trust assets isn’t mandatory for the marital deduction. For example, in Which of our two money-management services is better for you? The answer depends on whether you simply want current investment supervision or seek long-term family protection as well. Quick Comparison Professional, full-time supervision for your invested fundsYES YESWe act on your behalf or submit recommendations for your approval, as you preferYES YESCollection of income, recordkeeping, and periodic reportsYES YESFreedom to change your instructions or cancel the serviceYES YESLifetime protection, making it possible for us to use income and principal for your benet, pay bills, and attend to other nancial matters in the event of your incapacity NO YESContinuity of service for the benet of others following your death, without “probate” delaysNO YESReduction in expenses relating to settlement of your estateNO YESOpportunity to save estate taxes at death of surviving spouse or other beneciaries you have named NO YESInvestment management accountLIvIng trust

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6 7A Partial Checklist of Fiduciary DutiesHow do the investment responsibilities of trustees dier from those who are not considered “duciaries” under the law? The American College of Trust and Estate Counsel, a professional organization of lawyers dedicated to improving probate and trust practices, created “What It Means to Be a Trustee: A Guide for Clients.” The Guide notes that the following obligations are imposed upon the trustees of most trusts: Duty of skill and care. Duty to give notices.• Duty to furnish information and to communicate. Duty to account. Duty not to delegate. Duty of loyalty. Duty to avoid conict of interest. Duty of impartiality. Duty to invest. Duty of condentiality.a second marriage situation, a QTIP trust might pay its income to the surviving spouse for life and its principal to children from the rst marriage at the spouse’s death.QUALIFIED DOMESTIC TRUST (QDOT). When the surviving spouse is not a U.S. citizen, this special form of trust must be used to secure the marital deduction. A QDOT pays all its income to the surviving spouse, and may in certain circumstances be subject to U.S. transfer taxes before the death of the surviving spouse.What to Look for in Your TrusteeBENEFIT: Trusted advice from a qualiﬁed professionalPerhaps the single most important factor in the ultimate success of a trust-based wealth management plan is the choice of duciary. A wide range of capabilities is required for the eective discharge of a trustee’s responsibilities. By law, and subject to the specic terms of the trust document, the trustee may have remarkable power over the fate of the family fortune. Trust creators need to have condence that such power will be exercised wisely.There are many important, built-in benets to choosing a corporate duciary, such as us, as your trustee. For example: We treat estate and trust administration as a full-time job. We have facilities and systems for asset management that individuals lack. Trust funds in our care are doubly protected, both by internal audits and regulatory oversight by state or federal ocials. We have an unlimited life, while an individual may die, become incompetent, or just disappear. We bring long experience and group judgment to the job of investment management. We will treat beneciaries impartially, and most beneciaries will appreciate that. We can withstand pressure when a wayward beneciary asks to bend the terms of a trust, while an individual trustee might give in to requests for “more.”

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8 9Ordinary Trusts and Their Uncommon BenefitsNo two trusts are exactly alike. Here are representative samples of what can be achieved with a trust.BeneciaryType of trust or accountTax benets? Other benetsYourselfRevocable living trustNoneProfessional asset management, continuous nancial protection upon incapacity. Avoids probate in many states.Investment management accountNoneEasy to set up, gain perspective of investment professionals.Your spouseMarital deduction trustFull estate tax deferral in most casesSpouse receives all trust income at least annually, may direct ultimate distribution of trust assets.Qualied domestic trustFull estate tax deferralSpouse must receive all trust income.Qualied terminable interest property trust (QTIP trust)Full estate tax deferralEspecially appropriate for “blended families.” Children’s interests normally can’t be changed by spouse.Your familyBypass trustNo federal estate tax, possibly for decadesSurviving spouse may also be a beneciary.Spendthrift trust NoneTrust assets are protected from the beneciary’s creditors.Special needs trust NoneMay provide for enhanced quality of life while permitting continued government benets.Grantor retained annuity trust (GRAT )Income and estate tax savingsGrantor’s retained interest reduces gift tax exposure. Assets may be removed from estate taxation.Your favorite charity, plus yourself and/or family membersCharitable remainder trustIncome, gift, and estate tax deductionsIncome interest may be a percentage of the trust’s value or a xed dollar amount.

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10 11Special Needs TrustsBENEFIT: Lifetime supplement for someone with a disabilityParents and grandparents of a child with a lifelong disability, such as autism, have a special estate planning challenge. On the one hand, they want to provide the nancial support that the child never may be able to provide for himself or herself. On the other hand, they want to protect the child’s eligibility for the full range of government support programs, including health care. Distributing assets outright to a special needs person is likely to result in a disqualication for government benets. Completely disinheriting the child is not a good idea, because government benets alone may not be enough. Giving property to other family members with the “understanding” that it will be used for the benet of the special needs person may work for some families, but there are risks. For example, such assets will be vulnerable to creditors, including potential ex-spouses, should there be a divorce. The better course, for many families, is to establish a “third-party” special needs trust. A “rst-party” special needs trust is one established for oneself, with one’s own assets. The assets of rst-party trusts must be used to repay state Medicaid agencies that have paid for medical services. No such requirement applies to third-party trusts that are created for others.This is a complicated area of law, and the rules vary from state to state, so the advice of a lawyer well-versed in special needs trusts will be essential.When special needs trusts are administered by a corporate trustee, such as us, the assets receive professional management and the beneciary receives continuous nancial protection.Business Succession PlanningBENEFIT: Keeping a family business in the familyQuestions about succession planning will come up quite naturally when business owners are doing their estate and retirement planning. When key employees need to be retained, ownership and succession matters are again likely to be put on the table. Among the early questions to be addressed: Who will be available to succeed to management? Do they already have the necessary skills and training? What will be the cash ow needs of the business at the founder’s death? What impact will the founder’s death have on the value of the business? What will be the cash ow needs of the founder’s estate at his or her death? How will those needs be met? What role will nonfamily members play in the succession?A trust can be a particularly useful mechanism for providing ownership across several generations. The trust may hold investment assets as well as the business interests. A corporate trustee can handle trust administration, providing custodianship and investment management, as well as duciary supervision of the trust. When some family members participate in the business and others do not, a trust may provide a mechanism for balancing interests and addressing conicts without rancor or bias.

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12 13IRA RolloversBENEFIT: Tax deferral and careful management of retirement capitalIf you will be receiving a lump sum distribution from a 401(k) plan or other employer-provided qualied retirement plan, you have some important tax planning ahead. You can defer income taxes, often for many years or even decades, by rolling the lump sum into an IRA. Most retirees will nd an IRA rollover to be to their nancial advantage. Should you decide to take this approach, arrange for a trustee-to-trustee transfer to avoid the 20% withholding tax that otherwise applies to lump sum distributions.ROTH IRAS. Another important consideration is the conversion of an IRA to a Roth IRA. Ordinary income tax will have to be paid on the amount converted, but subsequent investment income may be free of further taxation. What’s more, there are no required minimum distributions for Roth IRA account owners, in contrast to ordinary IRAs.Asset Protection for Your GrandchildrenBENEFIT: Provide beneﬁciaries with more than a simple bequestAn inheritance might need protection from any number of dangers. Simple nancial immaturity and lack of investment experience, for example. The temptations of luxurious living. Addictions. Attacks by scam artists. Well-intentioned but poorly planned business ventures. Claims by creditors, notably ex-spouses.An inheritance in trust provides a barrier to nancial misjudgment, even as it delivers professional investment management of assets. The trust principal may be distributed to the beneciary over time on a planned schedule (so much at age 25, age 35, age 45, and so on) or upon the occurrence of specied events (completion of education, marriage or the beginning of a professional practice, for example). Or these distribution decisions can be left to the discretion of the trustee. A trust may transform an inheritance into a lifetime resource for nancial security. Here are examples of trusts that protect an inheritance.GIFTS-TO-MINORS TRUST. For children who are minors, contributions of up to $18,000 per year to this account will avoid gift taxes. A married couple may together set aside $36,000 each year for each child, so in a few years a signicant source of capital may be built up. Assets may be used for any purpose, including education funding, and must pass to the child when he or she reaches age 21.SPENDTHRIFT TRUST. The beneciary is forbidden to transfer any nancial interest that he or she has in the trust, and may not compel distributions.DISCRETIONARY TRUST. The trustee has sole discretion over what to do with trust income or principal, so that the beneciary has no interest in the trust that can be transferred.SUPPORT TRUST. The beneciary’s interest in the trust is limited to so much of the income as is needed for support, education and maintenance. These are but starting points to begin a discussion of the benets of a trust-based nancial plan. Wealth protection trusts need to be tailored to the unique requirements of the family to be served.Estate SettlementBENEFIT: Prompt implementation of will provisions, meticulous attention to detailsEveryone who owns property needs a will. If a valid will is lacking, a probate estate must be distributed according to the unbending laws of intestacy—a distribution that may bear little relationship to actual family needs or desires.

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1514Unfortunately, many individuals leave an unrecognized weak point in their wills: Spouses, relatives or business associates are designated to ll what is presumably the mostly “honorary” post of executor or personal representative.In reality, estate settlement involves a demanding, complex set of tasks—and the results, for better or worse, depend upon the experience, skills and judgment of those you designate to handle the job.The executor or personal representative you name in your will is responsible for safeguarding the assets of your estate, for paying proper debts, for contesting improper claims, for collecting sums owed the estate, and for ling estate and income tax returns. Your executor must decide what to sell (and when) to pay taxes and estate expenses, and what to hold for distribution to your beneciaries or to trusts that you establish for their benet.In less complicated times, people relied on close relatives or friends to settle their estates. Today, naming an inexperienced executor is not only shortsighted but also potentially costly. The characteristics of an ideal executor or personal representative include: Financial responsibility Unquestioned integrity and freedom from personal bias Patience and sympathy Experience in caring for all types of assets and holdings Informed investment judgment Familiarity with special tax questions that arise when an estate is settled Immortality (What if your executor dies before you do, or before completing the settlement of your estate?)We provide specialized skills in all phases of estate administration. As your executor, we’re sure to be on hand when needed, and no relative or family friend could hope to match our experience and facilities. Yet our fees for estate settlement are no greater than inexperienced individuals might be entitled to receive.Agent for Executor or TrusteeBecause many people are unfamiliar with the complexities of estate settlement, especially for larger estates, they may name a family member as executor of their wills, or as trustee for trusts created for the long-term preservation and management of family wealth. Once an individual has accepted the oce of executor or trustee, he or she may quickly learn that there is quite a lot to do on the job.We can provide agency services to give the individual crucial support. Such services may include: recordkeeping; investment management; tax planning and return preparation; accounting and reporting; discretionary distributions in accordance with the trust agreement.Our role in such circumstances can be tailored to meet the needs of the situation. We can take on just as much work as is wanted to get the estate settled or to keep the trust functioning smoothly—no more and no less.

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16Charitable TrustsBENEFIT: Harmonize philanthropy and family ﬁnancial protection objectivesCharitable trusts long have been an important part of estate planning. With trusts, the benet of owning securities or other assets can be split into two parts, present and future: One or more income beneciaries can be given the immediate benet of ownership in the form of periodic payments from the trust. These income payments can last for a specied number of years or for a beneciary’s lifetime. One or more “remainder beneciaries” can receive the income-producing assets in the future, when the required income payments have been completed.Both the right to receive trust income and the right to receive a trust’s “remainder interest” can be valued for the purpose of granting income tax deductions, and also for the purpose of guring gift or estate tax.There are many possible variations of charitable trusts, each with important income, gift, estate and generation-skipping transfer tax consequences. The key to using today’s charitable trusts successfully is to design an approach tailored to your own particular set of charitable intentions and family nancial planning objectives.Our Invitation to YouYou can look to us for a full range of money-management skills and facilities. You will nd an emphasis on responsive, personal service that is rare in today’s business world.We cordially invite you to become better acquainted with us and our work. If you prefer to have one of our nancial professionals meet with you at your home or oce, simply phone or write us to arrange an appointment.

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Trust & Investment Services Overview

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