Most of us will, at some point in our lives, require the services of a trust company. But where do we begin? And how? Here are some questions to get the process started:
What exactly is a trust company?
Many people associate trust companies with estate planning—and they're right. A trust is an excellent tool for reducing estate tax liability and avoiding probate, while spelling out the rules for the distribution of your assets after you are gone.
But trust companies today do much more than administer trusts. Many offer a wide range of wealth management solutions—from private banking and asset management to financial advisory and business succession planning services—all focused on helping you protect and grow your wealth.
How do I know if I need a trust company's services?
Establishing a relationship with a trust company pays long-term benefits in any number of circumstances. It is especially important if you have an ownership stake in a business, or are a parent of minor-aged children or in a blended family. You may prefer a trust company to manage your investment portfolio, especially if it is complex. You will need a trust company's services if you wish to ensure your heirs manage your assets according to your values.
How are trust companies different from stock brokerages and other investment firms?
In addition to offering services not necessarily available elsewhere, trust companies are held to a fiduciary standard. In other words, they are required to act in the best interest of the persons who have entrusted their funds to them. That means they are obligated to offer objective investment advice.
What should I look for in a trust company?
There are several important factors to consider:
- Asset size. When choosing a trust company, bigger isn't always better. Still, you'll want one with the critical mass required to offer the breadth of solutions you might need over your lifetime. While there is no "magic number," a trust company with assets of $2 billion or more usually meets that threshold.
- Professional and tenured staff. A trust company's professional staff should include attorneys, CPAs, certified financial planners, private bankers, portfolio managers and others who are experienced in creating solutions tailored to their clients' individual objectives. They should also have a trust administrator who will be your "go-to" person, responsible for ensuring your objectives are met and coordinating your personal client service team.
- Local decision-making. Many trust companies are part of large, national organizations whose decision-makers reside in other parts of the country. You might prefer one whose leadership and decision-making power are local, helping to ensure quicker issue resolution and easy access to management, should you desire it.
Beyond these "quantifiable" measures, you should also assess your comfort level with the professionals designated to be your personal advisors. These relationships, which can span decades, are built on—you guessed it—trust. iBi