Who will be your Successor Trustee?
Who will step into your shoes and manage your affairs if you become incapacitated or pass away? Will you appoint a family member, a friend, a bank, or an independent corporate trustee, such as Premier Trust. From our experience we can tell you being a trustee is not an honor, it is a job. Trusts are complex legal documents with major tax and family implications. Since 2001, we have administered thousands of trusts for individuals and families looking for an independent professional trust administration firm.
We realize you have spent your life building an estate and that leaving a legacy for your heirs is important to you. You have built a professional team around you consisting of your attorney, financial advisor, and CPA that have helped guide you along the way.
Unlike traditional trust companies that provide in house investment, legal, and accounting services we have created a model with the intent of retaining our clients’ team of professionals after they pass away. We provide trust administration only. We do not draft trusts, manage money, or prepare tax returns. Our role is strictly to administer your trust per your wishes. If we are named as trustee of your trust, rest assured we will collaborate with your team of professionals to guide the wealth transfer process for the benefit of the ones you love most.
What We Do
Wills -vs- Trusts
Myths and Realities
A trust is a business contract involving three parties. A trust requires a grantor (the creator), trustee and beneficiary.
In establishing a trust, a grantor must answer the question “For whom am I responsible?” The answer may include the client’s spouse, children, business partners, parents, a special needs child, or charities, to name a few.
The main benefit of an estate plan utilizing a trust is that the trustee will administer the assets of the trust in accordance with the grantor’s specific wishes, goals, and objectives as stated in the trust document. This will assure the orderly disposition of the client’s assets to achieve the outcome the client desires, limited only by the imagination of the grantor at the time the document is drafted.
Trusts can be revocable or irrevocable, the former being changeable by the grantor during the grantor’s lifetime and becoming irrevocable at the grantor’s death.
Revocable trusts set the stage for the disposition of assets similar to a will, however, they generally avoid probate administration and the costs associated with it. To gain this advantage, be sure that assets are retitled into the name of the revocable trust after it is established.
Irrevocable trusts generally are not readily changeable and are used to accomplish specific goals in estate and financial planning. They may contain provisions that instruct the trustee to distribute assets outright to beneficiaries at specific ages or to retain assets in trust for multiple generations. The latter “dynasty” provisions keep assets in trust for as long as permitted by state law, commonly referred to as “the rule against perpetuities”.
Generally, assets placed in an irrevocable trust are transferred outside of the grantor’s estate for estate and transfer tax purposes. An example is an Irrevocable Life Insurance Trust (ILIT) used to hold life insurance and collect proceeds outside of the client’s estate.
Asset Protection Trusts (APTs) are also irrevocable trusts, however, the assets they contain are considered held in the grantor’s estate and are taxed upon the grantor’s demise.
A special note: the grantor of a trust is held to a higher degree of competency than if he or she was simply creating a will.
When clients formulate their estate plan or update an existing plan, one of the most important decisions they must make is who will be the trustee. Will they appoint a family member, a friend, or an Independent Corporate Trustee, such as Premier Trust.
The Most Important Factors One Should Consider:
Trusts are complex legal documents with major tax and family implications – Corporate Trustees have professional knowledge and expertise in handling the complexities of trust administration.
Trust administration is time consuming and can be complex – Corporate Trustees employ dedicated professionals who have the experience and resources to manage the details of complex trusts.
Trust administration requires very specific financial reporting – Corporate trustees have the financial and operational systems to provide timely accurate statements and reports to meet regulatory and beneficiary requirements.
Trusts may continue for many generations – Corporate Trustees have a perpetual life. They will not die, become incompetent or go through distracting personal issues, all of which can happen to an individual family member or a friend who may be named as trustee.
Trust administration demands a high level of fiduciary responsibility and confidentiality – Corporate Trustees are regulated and monitored by state or federal government agencies and are held to a much higher standard than that of individual trustees.
Dealing with the distribution of trust assets to beneficiaries can be emotional – Corporate Trustees do not have the personal biases that a family member or a friend may have toward one or more beneficiaries. Corporate Trustees are not affected by emotions and personal agendas. Their job is to follow the client’s instructions objectively and faithfully.
The complexity of some trusts has fostered many myths and mysteries, many arising from misinformed media portrayal and a general misunderstanding of how a trust works. Following is a short list of some of the most common myths and mysteries.
Myth #1: Trusts are only for the rich.
This is categorically incorrect. Trusts are not only for the rich. They are the framework providing for the security and wellbeing of one’s heirs. Trusts may protect an inheritance from an heir’s creditors, including in certain states, a divorcing spouse. Divorce and creditor protection are not benefits limited to the rich. You need not be wealthy to benefit by a trust.
Myth #2: Trusts are used to hide money or avoid income taxes.
Again, this is categorically incorrect. Trusts are generally reporting entities to the IRS and other taxing authorities and they are not used to hide money from the authorities. Trusts pay taxes.
Myth #3: Trusts create “trust babies.”
Generally, trust assets are finite and beneficiaries do not have unlimited resources. The media portrays beneficiaries as trust babies, heirs that are “loafers” who enjoy the high life, living off the trust assets. Modern trust documents often require that beneficiaries meet certain qualifications to receive a distribution, such as being currently employed. This misconception is similar to the “reading of the will” often dramatized in movies and television; this simply does not happen in normal life.
“If I am from a state other than Nevada, why should I have my trust administered in Nevada?”
Typically, if a state has a personal income tax they probably also have a fiduciary state income tax. Nevada has neither tax, and this helps reduce the erosion of trust assets by the tax rate. The trust will always have to file a federal income tax return, but using a Nevada situs trustee will usually avoid any need to file a state fiduciary income tax return. However, if a beneficiary of a Nevada trust receives a trust distribution, that may subject that individual to their own state’s personal income tax filings.
Nevada Dynasty trust laws – In Nevada a trust can last 365 years. This may allow a trust to avoid the estate tax arena for multiple generations. Dynasty trusts are how wealth is accumulated by allowing trust assets to grow and compound within the trust fee of estate taxes that normally would be levied at the death of each generation.
Nevada is considered one of the best state jurisdictions for domestic asset protection.
Nevada laws now permit the decanting of an irrevocable trust. Many clients do not like to use irrevocable trusts as they feel the document can never be changed. However, Nevada laws are very flexible and allows this ability to decant a current trust to another new trust, should circumstances change to warrant the prior trust to be disregarded.
Nevada allows directed trusts. This provides for the duties within the administration of the trust to be separated to have the trustee perform administrative functions and an outside investment adviser to manage the trust portfolio. Many clients like the idea of splitting these duties so one entity does not control all aspects of their estate plan.
Premier Trust was created as a directed trustee since we began in 2001. We are not attorneys, CPA’s or investment managers, so the client can be assured that as trustee, we will keep their trusted advisors in place after they have passed.