Experience with bank or other corporate Trust Department?

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Luckywon
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Experience with bank or other corporate Trust Department?

Post by Luckywon » Tue Mar 13, 2018 6:19 pm

I am thinking of appointing Schwab Trust Services as an alternate successor trustee for my personal revocable Trust. This is in the event my SO predeceases me. I have spoken with Schwab and gotten some questions answered about the logistics. They can serve as successor Trustee in the event of my death or incapacity. There are some requirements as far as the Trust documents and terms and the Trust would have to be vetted by their Trust department. There would be no fees unless and until they actually became successor Trustee.

If anyone who has used or had experience with Schwab or any other corporate Trustee acting in this capacity would share their insights I'd appreciate it greatly!

Gill
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Re: Experience with bank or other corporate Trust Department?

Post by Gill » Tue Mar 13, 2018 8:15 pm

Never had experience with Schwab as trustee but plenty of experience with many other trust institutions. In general a corporate trustee offers what no individual can including perpetual existence, collective experience and judgment, financial responsibility, accessibility because doesn’t die or go on vacation, and regulation and oversight by auditors and governmental agencies.
Gill

Captain kangaroo
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Re: Experience with bank or other corporate Trust Department?

Post by Captain kangaroo » Tue Mar 13, 2018 8:33 pm

Have experience with us trust when a relative died.

The 3% they took from the estate was a bit of a kick in the teeth..

Captain kangaroo
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Re: Experience with bank or other corporate Trust Department?

Post by Captain kangaroo » Tue Mar 13, 2018 8:33 pm

Have experience with us trust when a relative died.

The 3% they took from the estate was a bit of a kick in the teeth..

Gill
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Re: Experience with bank or other corporate Trust Department?

Post by Gill » Tue Mar 13, 2018 8:37 pm

Captain kangaroo wrote:
Tue Mar 13, 2018 8:33 pm
Have experience with us trust when a relative died.

The 3% they took from the estate was a bit of a kick in the teeth..
US Trust is, or at least once was before being acquired by B of A, one of the finest trust institutions in the country. I would venture a guess they more than saved the estate 3% or more by prompt and efficient management of the estate.
Gill

frugalnotenough
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Re: Experience with bank or other corporate Trust Department?

Post by frugalnotenough » Tue Mar 13, 2018 8:47 pm

Luckywon wrote:
Tue Mar 13, 2018 6:19 pm
I am thinking of appointing Schwab Trust Services as an alternate successor trustee for my personal revocable Trust. This is in the event my SO predeceases me. I have spoken with Schwab and gotten some questions answered about the logistics. They can serve as successor Trustee in the event of my death or incapacity. There are some requirements as far as the Trust documents and terms and the Trust would have to be vetted by their Trust department. There would be no fees unless and until they actually became successor Trustee.

If anyone who has used or had experience with Schwab or any other corporate Trustee acting in this capacity would share their insights I'd appreciate it greatly!
We are also looking for a corporate trustee, and are considering Vanguard and US bank just because we have accounts with them. Vanguard's requirements sound very similar to Schwab's. You can find its fee schedule on its website. For now, we're leaning toward Vanguard.

delamer
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Re: Experience with bank or other corporate Trust Department?

Post by delamer » Tue Mar 13, 2018 8:55 pm

The trust that was created when my father died, in addition to the assets titled in my mother’s name, was managed by a small bank headquartered in the county where they’d lived for 50 years. So my parents had an ongoing relationship with the bank and had met with the key people in the trust department too.

Fee was about 0.75%.

Luckywon
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Re: Experience with bank or other corporate Trust Department?

Post by Luckywon » Wed Mar 14, 2018 12:50 am

Gill wrote:
Tue Mar 13, 2018 8:15 pm
Never had experience with Schwab as trustee but plenty of experience with many other trust institutions. In general a corporate trustee offers what no individual can including perpetual existence, collective experience and judgment, financial responsibility, accessibility because doesn’t die or go on vacation, and regulation and oversight by auditors and governmental agencies.
Gill
Many thanks for your comments, Gill. I am in California. Based on your experience, are there any trust institutions that you would particularly recommend I consider or avoid?

Luckywon
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Re: Experience with bank or other corporate Trust Department?

Post by Luckywon » Wed Mar 14, 2018 12:58 am

frugalnotenough wrote:
Tue Mar 13, 2018 8:47 pm

We are also looking for a corporate trustee, and are considering Vanguard and US bank just because we have accounts with them. Vanguard's requirements sound very similar to Schwab's. You can find its fee schedule on its website. For now, we're leaning toward Vanguard.
Thanks very much for your reply. I have not looked into Vanguard, but I will do so.

If I am incapacitated, the corporate trustee may have to administer the trust over a period of time rather than dispense the funds immediately. Considering that possibility, I am interested in what investment strategy each corporate trustee would implement, and how much it can be controlled by the terms of the trust as opposed to the discretion of the corporate trustee. Obviously, I would like my trust Investments to be in passive index funds rather than actively managed. I will be looking into that and am wondering if anyone here has information in that regard.
Last edited by Luckywon on Wed Mar 14, 2018 10:04 am, edited 1 time in total.

Luckywon
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Re: Experience with bank or other corporate Trust Department?

Post by Luckywon » Wed Mar 14, 2018 1:04 am

delamer wrote:
Tue Mar 13, 2018 8:55 pm
The trust that was created when my father died, in addition to the assets titled in my mother’s name, was managed by a small bank headquartered in the county where they’d lived for 50 years. So my parents had an ongoing relationship with the bank and had met with the key people in the trust department too.

Fee was about 0.75%.
Thanks for this information. Schwab has a sliding scale fee. For the first five million dollars, it is 0.5% annually. For the next five million dollars it is 0.25%. It goes lower after that. That covers trust administration and ordinary expenses. I am sure there are a bunch of other fees and expenses that are tacked onto that so the real rate is a little bit of an unknown.

afan
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Re: Experience with bank or other corporate Trust Department?

Post by afan » Wed Mar 14, 2018 4:47 am

That "base price plus extras" design seems to be typical of trust management. Hard to know what it will cost to do something when the bank does not know what it is.

In my vast experience I have settled exactly one estate. It involved a house that needed repairs before being sold, gathering scattered assets, paying final bills and estate taxes and planning a funeral. No private business or other more complicated investments. I hired a lawyer on an hourly basis for the things I did not know how to do.

The total cost of settling the estate was far below 1% of assets. Even if I had charged for my time it still would have been less than 1%.

Had there been no one to do what I did then maybe 3% paid to a bank would have been worth it. But, depending on what was involved, that is still a lot of money.

I suspect it will be impossible to find a corporate trustee that will promise to use only passive index investing, now and forever. Things change. That is a great approach now but even Vanguard, which does invest that way, now, will not commit to never changing. From their point of view, being too specific about investment approach is a good way to get sued down the road.
We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either | --Swedroe | We assume that markets are efficient, that prices are right | --Fama

letsgobobby
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Re: Experience with bank or other corporate Trust Department?

Post by letsgobobby » Wed Mar 14, 2018 5:02 am

Interview a few local trust companies. We have chosen a small regional trust company to be our successor trustee and feel the availability of a local trustee is well worth the added cost over, say, Vanguard. Remember your beneficiaries may need to have frequent contact over many decades with a trustee, and it seems to me that one would want that relationship to be as informed as possible to best meet the needs of the beneficiary. The fees in our case are 1% for the first $3 million and 0.8% and lower from there. The fees are inclusive of all trust and investment management services, right down to the tax filings.

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Chicken lady
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Re: Experience with bank or other corporate Trust Department?

Post by Chicken lady » Wed Mar 14, 2018 8:57 am

Read the material that discusses the fees carefully. The fees are broken down into several categories - one for administration of the trust, another for an annual base fee for creation and holding of the trust, another for investment management, etc. So, it may be .50 for administration but what about the annual trust fee, what about the charge for taking over investment management? I've looked at several trust options and in the 'modest' priced realm - the overall fees are similar. Also note the degree of control the trust company requires when you turn management of your assets over to them - you may think index - but I've yet to find a company that does not require you to relinquish all decision making preferences about the assets.

These charges are understandable, trust companies are not charities. Just be educated about what might be involved.

afan
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Re: Experience with bank or other corporate Trust Department?

Post by afan » Wed Mar 14, 2018 10:15 am

Chicken lady wrote:
Wed Mar 14, 2018 8:57 am

. Also note the degree of control the trust company requires when you turn management of your assets over to them - you may think index - but I've yet to find a company that does not require you to relinquish all decision making preferences about the assets.
There are arrangements called "directed trustee" under which the trust company agrees to do the administrative work and leave the investment management to a different entity. Typically the trust company fee would be lower since it is not responsible for investment. Of course, you have to pay someone else to do the investing, so the total cost might not be lower. This would provide more choices in investment manager. You would still have to worry about how your investment manager would behave years after you are able to supervise, how the manager interacted with the administrative trustee, turnover in either company...

One of the things that would give me pause about a regional bank would be stability. Bank trust departments have changed hands. Small banks get taken over. Some trust business has moved among multiple banks as the original banks merged/was taken over/sold it's trust operations. One could never know the future and even US Trust became part of Bank of America. But another factor to consider if you are looking for a long term trustee.

I don't get the appeal of having a local person. Looking at my financial life, I have never met anyone involved in running my
•credit cards
•life insurance
•health insurance
•dental insurance
•auto, home and umbrella insurance
•Vanguard
•Fidelity
•my bricks and mortar mega bank. I have occasionally used a teller, but they have no decision making capacity
•various other investment companies I used to deal with when I was young and foolish enough to wander beyond the big 3

•I never met the lawyer who helped settle an estate the one time I did it
•I never met the enrolled agent who did the income and estate tax returns

•when I redid estate planning a while ago I first met the attorney when we went to her office e to sign the papers. All of the work up to that point was by email and telephone. She could have been on the other side of the planet for all it mattered.
I have met my account rep at Schwab, who is great, but he does not make decisions. He just points me to the correct resources.

So I don't know what a local person would do that a remote one would not. Or why I would care.
Last edited by afan on Wed Mar 14, 2018 1:59 pm, edited 1 time in total.
We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either | --Swedroe | We assume that markets are efficient, that prices are right | --Fama

letsgobobby
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Re: Experience with bank or other corporate Trust Department?

Post by letsgobobby » Wed Mar 14, 2018 12:41 pm

As a competent and capable adult, you may be correct. For all others, a very involved local institution has some value, in my opinion. It was obvious from my first meeting with the local company, as compared to my frustrating and frequently rebuffed efforts to get the same information from Vanguard trust.

straws46
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Re: Experience with bank or other corporate Trust Department?

Post by straws46 » Wed Mar 14, 2018 12:51 pm

A local bank's trust department can be valuable if you have local real estate in the trust or if you have complicated investments that a discount broker would not specialize in. Also, if the beneficiaries are in the same locale it may help them to be able to form a relationship with the trust administrator. I had not thought about Schwab as a successor trustee until I saw this thread. Think I'll look into to it too. Thanks for the idea.

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FIREchief
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Re: Experience with bank or other corporate Trust Department?

Post by FIREchief » Wed Mar 14, 2018 2:03 pm

Luckywon wrote:
Wed Mar 14, 2018 12:58 am
If I am incapacitated, the corporate trustee may have to administer the trust over a period of time rather than dispense the funds immediately. Considering that possibility, I am interested in what investment strategy each corporate trustee would implement, and how much it can be controlled by the terms of the trust as opposed to the discretion of the corporate trustee. Obviously, I would like my trust Investments to be in passive index funds rather than actively managed. I will be looking into that and am wondering if anyone here has information in that regard.
As with many other things, the trurstee's investment powers will be controlled by the terms of the trust and your state's laws. I have looked into this thoroughly. Most trusts grant the truestee broad discretion with respect to they way that they invest the trust's financial assets. Beyond that, state trust laws typically include prudent investor language, which basically requires the trustee (or his appointee for financial management) to exercise special skills and invest prudently. IMHO, this is license for active management of the trust funds with the accompanying added costs and tax inefficiency. Use of proprietary funds with higher expense ratios is common (and costly).

The only way I know to be sure to avoid this, and to ensure that boglehead investing principles are followed, is to have the trust specifically require that. Despite rumors to the contrary, this absolutely can be done (and done in a way that still allows future flexibility if the world changes so that index funds are no longer the optimal investment). The terms of the trust will trump any corporate policies and even the state prudent investor rules (check your states laws, mine specifically state that the prudent investor guidelines must be followed UNLESS the governing document states otherwise). Your trust can simply state that financial assets must be invested in low cost, passively managed index funds to the maximum extent possible. If it helps with clarity, you can even mention a few current funds in a "such as" context. This will make your intentions VERY clear and provide no wiggle room for a trustee to deviate from boglehead principles. Most corporate trustees will refuse to administer such a trust. Not because they will have added costs and risks (it will be the exact opposite), but because it will rob them of a lucrative income stream.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

afan
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Re: Experience with bank or other corporate Trust Department?

Post by afan » Wed Mar 14, 2018 2:11 pm

Interesting. I found it far easier to get information from Vanguard. Most of what I wanted to know was posted online, a quick Google away. For the most part, bank trust departments did not put anything of substance online. I had to get someone on the phone to get them to send me a fee schedule, for example. Some of the places wanted me to come in, in the middle of the work day, just to find out what they offered at what price! I did not want to torture the beneficiaries with that antiquated way of doing business.

My long term beneficiaries, my kids, are fully wired, tech oriented people who would be baffled by the suggestion that they needed to show up, physically, in one particular location to do something that could be done faster and more easily online. "Are you kidding me"

I would think having multiple beneficiaries would be a good reason to have a national organization, rather than a local one. People move. If one beneficiary moves away from the area served by the local bank and another does not, will the local one become favored? What will it be like for the remote beneficiary when they need something? If the bank revolves around and "come in person" model, how does this serve someone who is a long flight away?

I like the idea of an 800 number, instead of showing up in person, as the primary mode of contact. Online services and chat, even better.
We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either | --Swedroe | We assume that markets are efficient, that prices are right | --Fama

afan
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Re: Experience with bank or other corporate Trust Department?

Post by afan » Wed Mar 14, 2018 2:17 pm

FIREchief wrote:
Wed Mar 14, 2018 2:03 pm
Your trust can simply state that financial assets must be invested in low cost, passively managed index funds to the maximum extent possible. ... Most corporate trustees will refuse to administer such a trust.
And there is the rub. Your trust can say whatever you want. But if you want a corporate trustee to serve then they have to agree. If you include language like that you may find yourself unable to get a company to take the business.

Even worse, you may find one that will take it now, or say it will, but when you are out of the picture and no longer able to shop for alternatives, the company may decide it doesn't want your business after all.

If they were already the trustee, having agreed to the terms, the company might be stuck. They could of course resign. Or raise the fees to make the same profit they would have gotten from their in house funds. If they resign then you have bequeathed to your heirs the problem of finding a company that will go along with your terms.

Safer to have good provisions for the beneficiaries to change trustees.
We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either | --Swedroe | We assume that markets are efficient, that prices are right | --Fama

Carefreeap
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Re: Experience with bank or other corporate Trust Department?

Post by Carefreeap » Wed Mar 14, 2018 2:31 pm

straws46 wrote:
Wed Mar 14, 2018 12:51 pm
A local bank's trust department can be valuable if you have local real estate in the trust or if you have complicated investments that a discount broker would not specialize in. Also, if the beneficiaries are in the same locale it may help them to be able to form a relationship with the trust administrator. I had not thought about Schwab as a successor trustee until I saw this thread. Think I'll look into to it too. Thanks for the idea.
One of the problems with small Trust companies is that they get bought and sold. The Trust for DH's grandmother changed 13 times over a 25 year period of time. All that churning caused three assets (two pieces of property and mineral rights) to get lost. They were eventually found but only after 10 years of use by a squatter who surface contaminated the property. We also recently found out that reversionary interests were not registered and those rights have been lost as well.

When DH inherited the Trust as a remainderman we found out that the Trust Department had engaged in some poor real estate investing. His hands were tied in trying to optimize the investment as the Trust company would not agree to any commercial refinancing because of a concern about the recourse provision in a standard commercial loan. Never mind that the loan was only 50% LTV. Plus the property manager was changed to a mean drunk buddy of the Trust's real estate officer. I wound up stepping in and managing it until we could sell it.

My takeaway lesson from the experience is to not have real estate in small (<5M) Trusts. The Trust companies don't make enough money to effectively manage those kinds of time intensive investments.

letsgobobby
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Re: Experience with bank or other corporate Trust Department?

Post by letsgobobby » Wed Mar 14, 2018 3:06 pm

Our trust gives beneficiary and trust protector the right to change corporate trustees whenever they want. So I am not worried about what might change about a local or national trust company, since they may be fired at any time.

In our case the beneficiaries are minor children. I would expect them to meet face to face with the trustee at least quarterly as they get older, less after high school. That was the experience of our local trust company as well.

When I proposed the company serve as trustee, I had a face to face meeting within three days with the CEO, the chief trust officer, and the chief investment officer. I looked at sample portfolios and asked specific questions about investment philosophy. I felt very comfortable with the team, their experience, and their scope of practice. I feel their services are worth the extra fifty basis points over, say, Vanguard or Schwab.

Carefreeap
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Re: Experience with bank or other corporate Trust Department?

Post by Carefreeap » Wed Mar 14, 2018 3:16 pm

letsgobobby wrote:
Wed Mar 14, 2018 3:06 pm
Our trust gives beneficiary and trust protector the right to change corporate trustees whenever they want. So I am not worried about what might change about a local or national trust company, since they may be fired at any time.
Even though the Trust company agreed to the change, DH and his brother had to get court approval to change Trustees of the non-revocable Trust. Not cheap and easy. Presumably it's done this way to keep an aggressive beneficiary from shopping Trust companies to find someone who will be more conducive to beneficiary demands.

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FIREchief
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Re: Experience with bank or other corporate Trust Department?

Post by FIREchief » Wed Mar 14, 2018 3:41 pm

afan wrote:
Wed Mar 14, 2018 2:17 pm
FIREchief wrote:
Wed Mar 14, 2018 2:03 pm
Your trust can simply state that financial assets must be invested in low cost, passively managed index funds to the maximum extent possible. ... Most corporate trustees will refuse to administer such a trust.
And there is the rub. Your trust can say whatever you want. But if you want a corporate trustee to serve then they have to agree. If you include language like that you may find yourself unable to get a company to take the business.
Well, you have to choose your poison. You likely will have far fewer corporate trustees interested in your trust (because they will bank less profit), but that's the whole idea. So you might have a local bank instead of MegaTrust administering the trust. If it preserves an additional 0.5% of trust funds each year, and adds 1.0% of return due to more efficient investments, then the trade off may very well be worth the inconvenience when ownership changes or somebody retires.
Even worse, you may find one that will take it now, or say it will, but when you are out of the picture and no longer able to shop for alternatives, the company may decide it doesn't want your business after all.
A lot of things "might" happen.
If they were already the trustee, having agreed to the terms, the company might be stuck. They could of course resign. Or raise the fees to make the same profit they would have gotten from their in house funds. If they resign then you have bequeathed to your heirs the problem of finding a company that will go along with your terms.
The earlier poster asked a question, and I provided a viable answer. You may not like the answer, or may have concerns that others may or may not share. Certainly, to your point, if a corporate trustee is going to insist on 1.0% annual one way or another, then they are going to get it and likely aren't the best financial choice.
Safer to have good provisions for the beneficiaries to change trustees.
This doesn't work if the trust allows broad discretion. The beneficiaries simply won't find anybody willing commit to 100% index funds. The only way to achieve this is for the trust to require it.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

letsgobobby
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Re: Experience with bank or other corporate Trust Department?

Post by letsgobobby » Wed Mar 14, 2018 3:48 pm

There may be some drawbacks, but I prefer this arrangement to using Vanguard (and I was originally planning to use them). If my children were adults my plan might be very different.

afan
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Re: Experience with bank or other corporate Trust Department?

Post by afan » Wed Mar 14, 2018 4:17 pm

Firechief,

I don't understand. If a corporate trustee is not willing to do all index, then how is writing that into the trust supposed to change their minds?

If you put a provision in the trust that MOST corporate trustees would reject, then your heirs have a problem finding one that will accept. If you put in a provision that NO corporate trustee will accept, then you have drafted a document for nothing. Heirs would have to go to court to change it into something a bank would accept.

Some people might be comforted by meeting the bank CEO. Unless I had triple digit millions to put in the account I would fund that alarming. As in "doesn't this person have anything more important to do???"

I would derive far more comfort from the structure of the institution, it's resilience to departures, the strength of it's accounting controls (assuming I convinced myself I was able to evaluate that) and almost anything else that would not change if the people in charge were to leave. For the long term, I could be certain that whoever was CEO would be gone by the time I would really need them.
We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either | --Swedroe | We assume that markets are efficient, that prices are right | --Fama

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FIREchief
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Re: Experience with bank or other corporate Trust Department?

Post by FIREchief » Wed Mar 14, 2018 4:33 pm

afan wrote:
Wed Mar 14, 2018 4:17 pm
Firechief,

I don't understand. If a corporate trustee is not willing to do all index, then how is writing that into the trust supposed to change their minds?

If you put a provision in the trust that MOST corporate trustees would reject, then your heirs have a problem finding one that will accept. If you put in a provision that NO corporate trustee will accept, then you have drafted a document for nothing.
You're mixing "most won't" with "NO corporate trustees." Certainly, if NO corporate trustee will accept a provision, then your other comments are valid. If 80% won't (simply because it doesn't allow the trust company to siphon off as much of the trust assets each year) but 20% will (because they'll accept less profit and understand that it comes with less risk and less work), then it simply comes down to a trade off. Again, you seem to be implying that this is not viable, but it is. The earlier poster asked for information and I provided it. I'm not really looking for a debate. There are many flavors of corporate (or independent) trustees. National MegaTrust, Vanguard, the First National Bank of Mytown, Dewey, Cheatem and Howe Law firm, etc.
Heirs would have to go to court to change it into something a bank would accept.
This is simply not true if the trust allows for appointment of a trust protector, when needed, to simply change the investment terms of the trust. I have explained this to you before.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

Kompass
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Re: Experience with bank or other corporate Trust Department?

Post by Kompass » Wed Mar 14, 2018 4:41 pm

Something I've not seen mentioned yet that a person may not know if they are not in the position of being/helping a beneficiary. The "Trust Advisor/Administrator" seems to be a very temporary position and if the beneficiary is a youth, or diminished in capacity in any way including just elderly, you will want to have a clear headed individual between the Beneficiary and the Trust administrator. Assuming corporate.

That nice fellow in the tweed jacket with all the smarts is unlikely to be around when the rubber meets the road.

I only have limited experience with this but one is with the local high touch "We'll take care of you boutique bank"/trust, and the other is with a MegaTrust. The person who is in actual contact with the beneficiary is a 6-12 month position while training to be something else, there is no incentive to actually be good at it and the ball can get dropped.

In 3 years with the two trust companies I am now on my 6th "administrator". 4 at local in 3 years, 2 at Mega in 9 months.

In taking care of my mother (mid-level dementia) and seeing how this plays out I have now put a Geriatric care manager and Elder Attorney on retainer to watch this if I should die or be incapacitated prior to her. In the mean time, I watch them carefully and remind them when something was to have been done. YMMV, just one persons experience.
The large print giveth and the fine print taketh away.

letsgobobby
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Re: Experience with bank or other corporate Trust Department?

Post by letsgobobby » Wed Mar 14, 2018 6:28 pm

Kompass wrote:
Wed Mar 14, 2018 4:41 pm
Something I've not seen mentioned yet that a person may not know if they are not in the position of being/helping a beneficiary. The "Trust Advisor/Administrator" seems to be a very temporary position and if the beneficiary is a youth, or diminished in capacity in any way including just elderly, you will want to have a clear headed individual between the Beneficiary and the Trust administrator. Assuming corporate.

That nice fellow in the tweed jacket with all the smarts is unlikely to be around when the rubber meets the road.

I only have limited experience with this but one is with the local high touch "We'll take care of you boutique bank"/trust, and the other is with a MegaTrust. The person who is in actual contact with the beneficiary is a 6-12 month position while training to be something else, there is no incentive to actually be good at it and the ball can get dropped.

In 3 years with the two trust companies I am now on my 6th "administrator". 4 at local in 3 years, 2 at Mega in 9 months.

In taking care of my mother (mid-level dementia) and seeing how this plays out I have now put a Geriatric care manager and Elder Attorney on retainer to watch this if I should die or be incapacitated prior to her. In the mean time, I watch them carefully and remind them when something was to have been done. YMMV, just one persons experience.
Obviously people do change, but in my ‘small’ case the CEO and chief trust officer have both been with the institution for over fifteen years. That may be an advantage of being with a smaller company: being a relatively bigger fish in a smaller pond has its advantages.

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Re: Experience with bank or other corporate Trust Department?

Post by golfCaddy » Wed Mar 14, 2018 6:42 pm

afan wrote:
Wed Mar 14, 2018 10:15 am
Chicken lady wrote:
Wed Mar 14, 2018 8:57 am

. Also note the degree of control the trust company requires when you turn management of your assets over to them - you may think index - but I've yet to find a company that does not require you to relinquish all decision making preferences about the assets.
There are arrangements called "directed trustee" under which the trust company agrees to do the administrative work and leave the investment management to a different entity. Typically the trust company fee would be lower since it is not responsible for investment. Of course, you have to pay someone else to do the investing, so the total cost might not be lower. This would provide more choices in investment manager. You would still have to worry about how your investment manager would behave years after you are able to supervise, how the manager interacted with the administrative trustee, turnover in either company...

One of the things that would give me pause about a regional bank would be stability. Bank trust departments have changed hands. Small banks get taken over. Some trust business has moved among multiple banks as the original banks merged/was taken over/sold it's trust operations. One could never know the future and even US Trust became part of Bank of America. But another factor to consider if you are looking for a long term trustee.

I don't get the appeal of having a local person. Looking at my financial life, I have never met anyone involved in running my
•credit cards
•life insurance
•health insurance
•dental insurance
•auto, home and umbrella insurance
•Vanguard
•Fidelity
•my bricks and mortar mega bank. I have occasionally used a teller, but they have no decision making capacity
•various other investment companies I used to deal with when I was young and foolish enough to wander beyond the big 3

•I never met the lawyer who helped settle an estate the one time I did it
•I never met the enrolled agent who did the income and estate tax returns

•when I redid estate planning a while ago I first met the attorney when we went to her office e to sign the papers. All of the work up to that point was by email and telephone. She could have been on the other side of the planet for all it mattered.
I have met my account rep at Schwab, who is great, but he does not make decisions. He just points me to the correct resources.

So I don't know what a local person would do that a remote one would not. Or why I would care.
I think it partly depends on what you need the trust to do. If the trust is invested in the three fund portfolio and nothing else, the investment management of the trust could almost be automated. If you're one of the Trump heirs, and the trust contains ownership stakes in dozens of privately held businesses and direct real estate investments, then the trustee would have an active role and I would expect a lot more communication between the trustees and the beneficiaries.

Kompass
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Re: Experience with bank or other corporate Trust Department?

Post by Kompass » Wed Mar 14, 2018 7:28 pm

letsgobobby wrote:
Wed Mar 14, 2018 6:28 pm
Kompass wrote:
Wed Mar 14, 2018 4:41 pm
Something I've not seen mentioned yet that a person may not know if they are not in the position of being/helping a beneficiary. The "Trust Advisor/Administrator" seems to be a very temporary position and if the beneficiary is a youth, or diminished in capacity in any way including just elderly, you will want to have a clear headed individual between the Beneficiary and the Trust administrator. Assuming corporate.

That nice fellow in the tweed jacket with all the smarts is unlikely to be around when the rubber meets the road.

I only have limited experience with this but one is with the local high touch "We'll take care of you boutique bank"/trust, and the other is with a MegaTrust. The person who is in actual contact with the beneficiary is a 6-12 month position while training to be something else, there is no incentive to actually be good at it and the ball can get dropped.

In 3 years with the two trust companies I am now on my 6th "administrator". 4 at local in 3 years, 2 at Mega in 9 months.

In taking care of my mother (mid-level dementia) and seeing how this plays out I have now put a Geriatric care manager and Elder Attorney on retainer to watch this if I should die or be incapacitated prior to her. In the mean time, I watch them carefully and remind them when something was to have been done. YMMV, just one persons experience.
Obviously people do change, but in my ‘small’ case the CEO and chief trust officer have both been with the institution for over fifteen years. That may be an advantage of being with a smaller company: being a relatively bigger fish in a smaller pond has its advantages.
In our small regional bank/trust situation the Branch mgr and Sr Trust advisor my father met and trusted had been there over a decade and is still there. Very attentive to my mother and her needs until the money transfers were complete. Then we were handed off to his very good assistant who was out of town training most of the time until he was promoted to Vice President and regional Mgr and we were handed off to his assistant, the bright promising young woman who was also absent most of the time and is now a CTFA who then handed us off to the new promising young assistant who is generally not available at this time. This bank has 9 small branches and is highly rated by Bankrate, it is a DFA affiliate, this branch has 6 employees. Several now large fish in a very small pond.

I very much hope and would expect your situation would turn out differently. :beer

I offered our situation only as a cautionary tale to those making arrangements for their heirs. Fortunately we do not rely on this and have pretty much walked away from it using other assets for her care.
The large print giveth and the fine print taketh away.

letsgobobby
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Re: Experience with bank or other corporate Trust Department?

Post by letsgobobby » Wed Mar 14, 2018 8:31 pm

As long as the trust allows the trust protector and beneficiary to change trustee, I don't see what else one could do. My kids can change to Vanguard if they want and at some point in their lives it may be the right thing to do.

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FIREchief
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Re: Experience with bank or other corporate Trust Department?

Post by FIREchief » Wed Mar 14, 2018 8:37 pm

letsgobobby wrote:
Wed Mar 14, 2018 8:31 pm
As long as the trust allows the trust protector and beneficiary to change trustee, I don't see what else one could do. My kids can change to Vanguard if they want and at some point in their lives it may be the right thing to do.
Thanks. Many are leaving this out of the equation. I would replace your "and" with an "or." This is one of those realms where many can only see things one way, and that's "the way things have always been done."
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

bsteiner
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Re: Experience with bank or other corporate Trust Department?

Post by bsteiner » Wed Mar 14, 2018 9:26 pm

letsgobobby wrote:
Wed Mar 14, 2018 8:31 pm
As long as the trust allows the trust protector and beneficiary to change trustee, ..,
Trust protector? Who has the power to change the protector? Who has the power to change the person who has the power to change the protector?

Why not simply give the beneficiary the power (after reaching a specified age) to remove and replace his/her co-trustee (provided the replacement trustee is not a close relative or subordinate employee)?

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FIREchief
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Re: Experience with bank or other corporate Trust Department?

Post by FIREchief » Wed Mar 14, 2018 10:39 pm

bsteiner wrote:
Wed Mar 14, 2018 9:26 pm
letsgobobby wrote:
Wed Mar 14, 2018 8:31 pm
As long as the trust allows the trust protector and beneficiary to change trustee, ..,
Trust protector? Who has the power to change the protector? Who has the power to change the person who has the power to change the protector?

Why not simply give the beneficiary the power (after reaching a specified age) to remove and replace his/her co-trustee (provided the replacement trustee is not a close relative or subordinate employee)?
This confused me as well. I can't understand why a trust protector would be empowered to change trustees instead of the beneficiary.

I think there are situations where a trust protector can play a meaningful role (provided it is in the control at some level of the beneficiaries), but this isn't it.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

letsgobobby
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Re: Experience with bank or other corporate Trust Department?

Post by letsgobobby » Wed Mar 14, 2018 11:31 pm

FIREchief wrote:
Wed Mar 14, 2018 10:39 pm
bsteiner wrote:
Wed Mar 14, 2018 9:26 pm
letsgobobby wrote:
Wed Mar 14, 2018 8:31 pm
As long as the trust allows the trust protector and beneficiary to change trustee, ..,
Trust protector? Who has the power to change the protector? Who has the power to change the person who has the power to change the protector?

Why not simply give the beneficiary the power (after reaching a specified age) to remove and replace his/her co-trustee (provided the replacement trustee is not a close relative or subordinate employee)?
This confused me as well. I can't understand why a trust protector would be empowered to change trustees instead of the beneficiary.

I think there are situations where a trust protector can play a meaningful role (provided it is in the control at some level of the beneficiaries), but this isn't it.
Who protects the interests of the minor beneficiary from a trustee gone bad?

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FIREchief
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Re: Experience with bank or other corporate Trust Department?

Post by FIREchief » Thu Mar 15, 2018 12:06 am

letsgobobby wrote:
Wed Mar 14, 2018 11:31 pm
FIREchief wrote:
Wed Mar 14, 2018 10:39 pm
bsteiner wrote:
Wed Mar 14, 2018 9:26 pm
letsgobobby wrote:
Wed Mar 14, 2018 8:31 pm
As long as the trust allows the trust protector and beneficiary to change trustee, ..,
Trust protector? Who has the power to change the protector? Who has the power to change the person who has the power to change the protector?

Why not simply give the beneficiary the power (after reaching a specified age) to remove and replace his/her co-trustee (provided the replacement trustee is not a close relative or subordinate employee)?
This confused me as well. I can't understand why a trust protector would be empowered to change trustees instead of the beneficiary.

I think there are situations where a trust protector can play a meaningful role (provided it is in the control at some level of the beneficiaries), but this isn't it.
Who protects the interests of the minor beneficiary from a trustee gone bad?
Thanks. That makes sense. I hadn't thought about that.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

Luckywon
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Re: Experience with bank or other corporate Trust Department?

Post by Luckywon » Thu Mar 15, 2018 12:52 am

OP here and I would like to thank all for the many valuable insights and well considered thoughts above.

What I am trying to plan for is the unfortunately real possibility that I may at some time be incapacitated and have no one but friends or out of state relatives (nieces or nephews) to rely on. In such a case, I envision my estate documents nominating

1) A corporate trustee
2) An individual to be a Trust Protector and in a separate role, the same person to be my Agent Under Power of Attorney to manage my health care and living needs. (TP/POA)

I would rely on the TP/POA to work with the corporate trustee to use my assets to provide for me. (Schwab Trust services cannot serve as medical POA.) It's not an ideal situation but at this point the best one I can envision where my Trust assets would be protected and available to provide for me with as little burden as possible on the TP/POA. My assets are enough that barring a black swan event, there will be ample funds to compensate the TP/POA and enable him/her to retain other professionals as needed. I plan to meet with an attorney to discuss this and revise my current estate plan along these lines.

An alternative here in California is to nominate a Professional Fiduciary to act as Trustee or POA. In California, these agents are licensed and regulated. On the website for the Professional Fiduciary Association of California there is a search function for agents and there are a great number of them around. However, I am very leery of engaging such a person for many reasons. I suspect there are also many good reasons to avoid them that I have not imagined. So the plan above seems, based on my research so far, to be the best option for me but there are many details which I am unclear on and I am hoping the collective wisdom here will assist me in working these out and confirming whether it is indeed a good option or even feasible.

Regarding the issue of whether to use a local or national corporate trustee, note that Charles Schwab Trust Company (CSTC) is based in Nevada and their Standard Trust Provisions (STP) state that Nevada law applies to their Agreement. Not sure whether that may be of importance down the line but may be something to consider vis-a-vis the question of local or national corporate trustee?

Reading the mandatory Standard Trust Provisions for Schwab Trust, they gives broad discretion to CSTC to manage investments, change their fees with notice, resign as trustee and there are countless other provisions that sound potentially troublesome. So I certainly see value in my case for a trust protector having authority to appoint a different corporate trustee as easily as possible.

Again many thanks for all the thoughtful contributions so far and in advance for any insights into the work-ability of my plan outlined above!!

letsgobobby
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Re: Experience with bank or other corporate Trust Department?

Post by letsgobobby » Thu Mar 15, 2018 11:03 am

bsteiner and FIREchief, the trust protector is going to be the guardian of the kids. That provision goes away when kids turn 21. At that point it's just them and the trustee.

It seems that so much of estate planning is simpler once you know your children are mature, responsible, educated adults.

afan
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Re: Experience with bank or other corporate Trust Department?

Post by afan » Thu Mar 15, 2018 12:04 pm

I was going to suggest the guardian have the power to change trustees. Often the title of trust protector applies to someone who has powers beyond that.

If the guardian or beneficiaries can change the trustee then it would seem there is no need to write investment instructions into the trust then give a protector the right to change those instructions if necessary.

With or without the instructions in the trust, the people who can change trustees would have to look at the cost, investment approach and services of the trustee. If any of these are found wanting and they can get something better elsewhere then the people who can change trustees can move on to greener pastures. If the investment approach is specified in the trust the the trust protector not only has to find a better trustee, the protector also has to negotiate with the trustee for revised language in the trust, followed by making those changes. This sounds like two steps that could be avoided. If the trust protector is trusted to decide which bank is likely to manage the money as best as possible under the circumstances, then why add the need to revise the trust? Just move it.

If the protector cannot be trusted to decide how to manage the money then clearly they cannot be trusted to change the terms of the trust with respect to investment management.

The value I could imagine for a trust protector, able to change trustees, would be for a discretionary trust where the best trustee would be a close relative or subordinate of the beneficiary. As I understand it, if the beneficiary were to appoint such a person as trustee this could have adverse asset protection consequences. But if the trust protector did it, I assume, this would be ok?
with as little burden as possible on the TP/POA
This is also one of our goals. It is enough to ask a relative to keep a general eye on things. Expecting then to go through the process of amending the trust seems like too much to ask.
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