Vanguard vs Fido vs Schwab as corporate trustee

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Godzilla
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Vanguard vs Fido vs Schwab as corporate trustee

Post by Godzilla »

My wife and I will be updating our trusts very soon. Currently we have Vanguard set up as the corporate trustee but I am willing to change to another corporate trustee if there is a better choice out there. I am happy to have Vanguard choose investments as it sees fit but with the slow decline in customer service at their brokerage side I worry that their trust service may also see a decline or simply be phased out.
Some useful information about our situation - about 3 million in assets now held mostly at Vanguard, real estate (our modest home) will be sold after our deaths and folded into trust assets. Investments are in Vanguard index funds. The trustee may need to administer trust assets for many decades.

My questions are:
Has anyone actually used Vanguard as a corporate trustee yet? If so what has the experience been like? (I have yet to read of someone's real life experience being actively served by Vanguard's trust services, which seems odd to me).

How does Vanguard stack up against the trust services offered by Fidelity and Schwab? Has anyone on the site used either?

Does anyone else wonder why no company has swooped in and disrupted the corporate trustee industry - wow it would seem that there is a fortune to be made there.

Thanks everyone for input.
000
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Re: Vanguard vs Fido vs Schwab as corporate trustee

Post by 000 »

To my knowledge, Vanguard will not serve as trustee for anything but marketable securities. No real estate, no Government Savings Bonds.
Lucky2Invest
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Re: Vanguard vs Fido vs Schwab as corporate trustee

Post by Lucky2Invest »

I didn’t think you could use Vanguard as trustee if you had real estate...I could be wrong.

In any case...I went through this a couple years ago searching high and low for a corporate trustee. We ended up not using a corporate trustee as our situation was quite unique. But Schwab was our favorite and we ended up moving all our money to them after speaking with them about their trustee services.

Vanguard won’t let you self direct. It sounds like this isn’t an issue for you. Schwab will and the fees were cheaper than Vanguard and Fidelity.

Give Schwab a call. If customer service is important... they impressed us.
000
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Re: Vanguard vs Fido vs Schwab as corporate trustee

Post by 000 »

Lucky2Invest wrote: Fri Aug 21, 2020 10:53 pm Schwab will and the fees were cheaper than Vanguard and Fidelity.
Care to post the fee differential?
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Godzilla
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Re: Vanguard vs Fido vs Schwab as corporate trustee

Post by Godzilla »

Thanks LuckytoInvest.
You are correct, Vanguard will not deal with real estate. (It's also my understanding that neither will Schwab or Fidelity). The real estate will be handled outside of the corporate trustee - all assets the corporate trustee will handle will be in plain vanilla mutual funds.
Good to hear you had a good experience with Schwab and liked their service. I am putting one check mark next to Schwab's name.
sport
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Re: Vanguard vs Fido vs Schwab as corporate trustee

Post by sport »

Vanguard as a trustee would presumably invest in Vanguard's low cost index funds. What would Fido and Schwab invest your money in? If their fees are lower, but they invest in costlier investment products, they may turn out to be more expensive than meets the eye.
MikeG62
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Re: Vanguard vs Fido vs Schwab as corporate trustee

Post by MikeG62 »

Godzilla wrote: Fri Aug 21, 2020 10:26 pm My wife and I will be updating our trusts very soon. Currently we have Vanguard set up as the corporate trustee but I am willing to change to another corporate trustee if there is a better choice out there. I am happy to have Vanguard choose investments as it sees fit but with the slow decline in customer service at their brokerage side I worry that their trust service may also see a decline or simply be phased out.
Some useful information about our situation - about 3 million in assets now held mostly at Vanguard, real estate (our modest home) will be sold after our deaths and folded into trust assets. Investments are in Vanguard index funds. The trustee may need to administer trust assets for many decades.

My questions are:
Has anyone actually used Vanguard as a corporate trustee yet? If so what has the experience been like? (I have yet to read of someone's real life experience being actively served by Vanguard's trust services, which seems odd to me).

How does Vanguard stack up against the trust services offered by Fidelity and Schwab? Has anyone on the site used either?

Does anyone else wonder why no company has swooped in and disrupted the corporate trustee industry - wow it would seem that there is a fortune to be made there.

Thanks everyone for input.
OP, there have been a number of threads here about using Vanguard as trustee. Use the search bar above. Here are a few:

viewtopic.php?t=208409

viewtopic.php?t=216778

viewtopic.php?t=15468
Real Knowledge Comes Only From Experience
afan
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Re: Vanguard vs Fido vs Schwab as corporate trustee

Post by afan »

I went through the same search and ended up doing nothing.

Schwab will hold real estate. I don't know about Fidelity.

I could not get a simple answer as to how Schwab would invest. Given the cash drag in the Intelligent Portfolio service, I worry they would do the same thing with a trust.

Years ago, Fidelity told me they would invest in high expense active funds. I don't know whether this has changed.

There are apparently trust companies that will serve as administrative trustee for a low flat fee. Then you make other arrangements, which could be an individual, for managing the investments. Sounds appealing but I have not pursued it.

I would share the concerns about quality of service. Although I chalk it up to the incredible rate at which V has been growing and recognize this cannot continue, it is still a worry.
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
J295
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Re: Vanguard vs Fido vs Schwab as corporate trustee

Post by J295 »

As a point of reference we have accounts at Fidelity and Vanguard and have had no issues. In fact, we’ve been with Fidelity 38 years and been highly satisfied.

I am a retired lawyer, and our firm had a robust estate planning section and I observed a fair amount of trust related activities.

Although we presently have no need for a corporate trustee, if we did I would have used one of our locally owned banks. I would want the beneficiaries to have access to a known local community member.

For us the fees are secondary consideration… Family harmony and seamless operation of the trust are job one.

I have observed the bureaucracy and generally cumbersome nature of dealing with the “big banks” and it’s something I personally would want to avoid.

Ymmv.
afan
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Re: Vanguard vs Fido vs Schwab as corporate trustee

Post by afan »

Considering the rate at which smaller banks are taken over by the big ones, how confident can one be that a local bank will survive?
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
Gill
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Re: Vanguard vs Fido vs Schwab as corporate trustee

Post by Gill »

J295 wrote: Sat Aug 22, 2020 6:43 am ...if we did I would have used one of our locally owned banks.
How many of those are there and do they have trust powers and a significant amount of assets under management?
Gill
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bsteiner
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Re: Vanguard vs Fido vs Schwab as corporate trustee

Post by bsteiner »

000 wrote: Fri Aug 21, 2020 10:57 pm
Lucky2Invest wrote: Fri Aug 21, 2020 10:53 pm Schwab will and the fees were cheaper than Vanguard and Fidelity.
Care to post the fee differential?
Vanguard: https://www.vanguard.com/pdf/a196.pdf. See page 10. Their minimum is $1 million.

Schwab: https://www.schwab.com/public/schwab/in ... t_services. Scroll to the middle of the page. Their minimum is effectively $1 million.

I couldn't find Fidelity.
Godzilla wrote: Fri Aug 21, 2020 10:26 pm ...
Has anyone actually used Vanguard as a corporate trustee yet? If so what has the experience been like? (I have yet to read of someone's real life experience being actively served by Vanguard's trust services, which seems odd to me).

How does Vanguard stack up against the trust services offered by Fidelity and Schwab? Has anyone on the site used either?

Does anyone else wonder why no company has swooped in and disrupted the corporate trustee industry - wow it would seem that there is a fortune to be made there.
...
Several clients have named Vanguard as a trustee in their Wills. However, none of them has died, so I don't know how it will work out.

One client has named Fidelity as a trustee in their Wills with an arrangement for an outside firm to manage the assets. I think that's the typical structure with Fidelity. I think the cost of that will be more than if they used a conventional bank or trust company.

So far I haven't had any clients name Schwab as a trustee.

Since Vanguard uses PAS to manage the assets, I think they're likely to invest in an efficient manner.

My guess is that it would be difficult for a bank or trust company to offer a high level of service at a low price.
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FIREchief
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Re: Vanguard vs Fido vs Schwab as corporate trustee

Post by FIREchief »

sport wrote: Sat Aug 22, 2020 12:00 am Vanguard as a trustee would presumably invest in Vanguard's low cost index funds.
You may be correct, but I wouldn't just assume this to be the case.
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: Vanguard vs Fido vs Schwab as corporate trustee

Post by afan »

Bsteiner,

Thanks for the information.
I suspect I am like most bogleheads in that one "service" that I want to avoid is active management.

We are looking for a place that will do the rest of the trustee job while putting the portfolio in a handful of cap weighted index funds. Since active managers tend to run up costs on that part of the job, we seek a company that will spend the money it collects in fees on the other aspects of the trustee work.

Do you have any idea what it costs to do a good job if one takes asset management out of the equation?
Do the companies that will serve as administrative trustee but not manage the money provide good customer service?
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
Fractalleaf
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Re: Vanguard vs Fido vs Schwab as corporate trustee

Post by Fractalleaf »

You don't say anything about your beneficiaries, so it's difficult to gauge how much assistance they will need from the trustee.

We selected a large regional bank and trust to have the most personalized service for our only beneficiary. The fees are high, but so is the service. They will manage real estate which is an important consideration if that is a sizeable fraction of your net worth. I would not want to force the liquidation of real estate at some unknown point in the future. Rental income can be an important income stream, even when the housing market is lagging. And what if a beneficiary is living in your home? Do you want them booted out without the option of inheriting and residing in the property at its stepped up value? We left about 20% of assets outside of trust, destined to become an inherited IRA. Our beneficiary will benefit from discussions with advisors controlling the trust, and her management of the IRA proceeds will inform their decisions on the distribution of trust assets.
afan
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Re: Vanguard vs Fido vs Schwab as corporate trustee

Post by afan »

Fractalleaf wrote: Sat Aug 22, 2020 2:23 pm You don't say anything about your beneficiaries, so it's difficult to gauge how much assistance they will need from the trustee.

We selected a large regional bank and trust to have the most personalized service for our only beneficiary. The fees are high, but so is the service. They will manage real estate which is an important consideration if that is a sizeable fraction of your net worth. I would not want to force the liquidation of real estate at some unknown point in the future. Rental income can be an important income stream, even when the housing market is lagging. And what if a beneficiary is living in your home? Do you want them booted out without the option of inheriting and residing in the property at its stepped up value? We left about 20% of assets outside of trust, destined to become an inherited IRA. Our beneficiary will benefit from discussions with advisors controlling the trust, and her management of the IRA proceeds will inform their decisions on the distribution of trust assets.
You could provide for the beneficiary staying in the house in the terms of your trust or will.

Can I ask how high the fees are? In this low return environment, many people are concerned that the bank or trust company may collect all the return on investment, or more, leaving no growth for the beneficiary.

If you want a corporate trustee to manage investment real estate then you are definitely talking high fees. Depending on the circumstances, it could be worth it.
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
Fractalleaf
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Re: Vanguard vs Fido vs Schwab as corporate trustee

Post by Fractalleaf »

Can I ask how high the fees are? In this low return environment, many people are concerned that the bank or trust company may collect all the return on investment, or more, leaving no growth for the beneficiary.
The annual trust administration fees at the bank and trust are stepped, so the first 1 million is @1.3%, next 2 million @1%, next 4 million @0.75% etc. Plus there is an estate settlement fee of about 2% that includes tax preparation and other legal work.

It is very costly but still better than leaving everything to the wind with a beneficiary with no financial savvy. If we survive another 10 years we will revisit the estate plan and may make some changes, but this is the right strategy for our current circumstance.
afan
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Re: Vanguard vs Fido vs Schwab as corporate trustee

Post by afan »

If those fees include managing a portfolio of investment properties, then they are quite good compared to what people gave been reporting.
If it does not include managing the real estate, nor so good.

I have never understood the appeal of having local people at the bank to talk to:

I will be gone, so no longer dealing with them.
Banks merge or get taken over all the time. Constantly with smaller and mid sized banks but even US Trust became part of Bank of America, then disappeared.

The bank might be local to where I was living when I set things up. I have no idea where my kids may be living 2 years from now, let alone 20.

Over time, and it need not be long time, the people who work at my branch will move on.

Even if those people, that branch and that bank stay put, my heirs will not.

So I put more emphasis on convenience for them, with a preference for a place that is set up to do everything online, which is the way people live their lives today. God forbid the trustee would want them to come to the bank in person to do something. Who has time for that?
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
Kompass
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Re: Vanguard vs Fido vs Schwab as corporate trustee

Post by Kompass »

I have a trust in my name being managed by Vanguard, I moved it to them after a year of dismal performance at a regional wealth management firm. You have not stated what sort of person the beneficiary would be but if it is someone disinterested in finance, special needs or similar I would be careful. The investments will be handled by someone selected from the PAS pool, the administration will be a separate person and you will not be able to speak to anyone else there. I think it is also important to note that there is no website, documents are mail through USPS on paper, communication is via telephone or email. As far as watching your investments you will have access to view selected pages of a Trust Pal account good for accountants, less so for the layperson but acceptable.

I selected them as less problematic than the regional bank, for their investing philosophy, and fee schedule. That is what you get and as a heads up I have had administrative and customer service problems with Vanguard as trustee. It is a bare bones “get what you pay for“ service which is what I wanted I just wish it worked a bit better. I am going to start looking for further alternatives, maybe Schwab, I don’t know what I will find, this may be as good as it gets. I look forward to seeing the other responses in this thread for help in guiding my own decisions as well. Thanks for starting this conversation.
The large print giveth and the fine print taketh away.
illumination
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Re: Vanguard vs Fido vs Schwab as corporate trustee

Post by illumination »

J295 wrote: Sat Aug 22, 2020 6:43 am As a point of reference we have accounts at Fidelity and Vanguard and have had no issues. In fact, we’ve been with Fidelity 38 years and been highly satisfied.

I am a retired lawyer, and our firm had a robust estate planning section and I observed a fair amount of trust related activities.

Although we presently have no need for a corporate trustee, if we did I would have used one of our locally owned banks. I would want the beneficiaries to have access to a known local community member.

For us the fees are secondary consideration… Family harmony and seamless operation of the trust are job one.

I have observed the bureaucracy and generally cumbersome nature of dealing with the “big banks” and it’s something I personally would want to avoid.

Ymmv.

The problem I ran into is the smaller "local" operations can have fees that are several times higher than what a place like Schwab or Vanguard charge, and it's not splitting hairs, like 200%+ higher. I even came across one recommended highly by an estate attorney and found an exit fee that was percent of the assets under management in the fine print. And oftentimes the way they manage money is more like a traditional financial planner and usually pretty "anti-boglehead". It adds up to a lot of headwinds on the trust returns.

Also, people come and go with companies nowadays that even if you had someone locally you worked with you really liked, are they really going to be there past a decade? Is the bank even going to exist? It's pretty rare nowadays.

But if you have a trust that has a lot of management needed, my experience was the bigger places like Schwab and Vanguard don't really want that business and will seek changes or they won't take it.
afan
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Re: Vanguard vs Fido vs Schwab as corporate trustee

Post by afan »

Kompass wrote: Sat Aug 22, 2020 3:44 pm I have a trust in my name being managed by Vanguard, I moved it to them after a year of dismal performance at a regional wealth management firm. You have not stated what sort of person the beneficiary would be but if it is someone disinterested in finance, special needs or similar I would be careful. The investments will be handled by someone selected from the PAS pool, the administration will be a separate person and you will not be able to speak to anyone else there. I think it is also important to note that there is no website, documents are mail through USPS on paper, communication is via telephone or email. As far as watching your investments you will have access to view selected pages of a Trust Pal account good for accountants, less so for the layperson but acceptable.

I selected them as less problematic than the regional bank, for their investing philosophy, and fee schedule. That is what you get and as a heads up I have had administrative and customer service problems with Vanguard as trustee. It is a bare bones “get what you pay for“ service which is what I wanted I just wish it worked a bit better. I am going to start looking for further alternatives, maybe Schwab, I don’t know what I will find, this may be as good as it gets. I look forward to seeing the other responses in this thread for help in guiding my own decisions as well. Thanks for starting this conversation.
Kompass,

Thank you for joining in. You are I believe the first Vanguard trust customer I have seen on here who is reporting the real life performance of V as trustee.

I gather that having a trust officer and and investment advisor is the standard set up for trust accounts, not just at Vanguard. But all of us are concerned about the quality of beneficiary service. If that is not good, then all the advantages of a trust go away. Also worrisome that there is no recourse if you are not satisfied with the responses you get. It is hard to imagine a trust that would be completely on autopilot with no need ever to have the trustee do something.

Unfortunately, we also have had some people report very bad experiences with high priced trust companies and banks as well. So paying very much more does not appear to assure good service either.

One important feature is to have the ability to change trustees, as Kompass is contemplating. Then one can at least get out. Some of the complaints about high priced trustees have indicated the need for a court battle to replace 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
Kompass
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Re: Vanguard vs Fido vs Schwab as corporate trustee

Post by Kompass »

afan wrote: Sun Aug 23, 2020 9:09 am
Kompass wrote: Sat Aug 22, 2020 3:44 pm I have a trust in my name being managed by Vanguard, I moved it to them after a year of dismal performance at a regional wealth management firm. You have not stated what sort of person the beneficiary would be but if it is someone disinterested in finance, special needs or similar I would be careful. The investments will be handled by someone selected from the PAS pool, the administration will be a separate person and you will not be able to speak to anyone else there. I think it is also important to note that there is no website, documents are mail through USPS on paper, communication is via telephone or email. As far as watching your investments you will have access to view selected pages of a Trust Pal account good for accountants, less so for the layperson but acceptable.

I selected them as less problematic than the regional bank, for their investing philosophy, and fee schedule. That is what you get and as a heads up I have had administrative and customer service problems with Vanguard as trustee. It is a bare bones “get what you pay for“ service which is what I wanted I just wish it worked a bit better. I am going to start looking for further alternatives, maybe Schwab, I don’t know what I will find, this may be as good as it gets. I look forward to seeing the other responses in this thread for help in guiding my own decisions as well. Thanks for starting this conversation.
Kompass,

Thank you for joining in. You are I believe the first Vanguard trust customer I have seen on here who is reporting the real life performance of V as trustee.

I gather that having a trust officer and and investment advisor is the standard set up for trust accounts, not just at Vanguard. But all of us are concerned about the quality of beneficiary service. If that is not good, then all the advantages of a trust go away. Also worrisome that there is no recourse if you are not satisfied with the responses you get. It is hard to imagine a trust that would be completely on autopilot with no need ever to have the trustee do something.

Unfortunately, we also have had some people report very bad experiences with high priced trust companies and banks as well. So paying very much more does not appear to assure good service either.

One important feature is to have the ability to change trustees, as Kompass is contemplating. Then one can at least get out. Some of the complaints about high priced trustees have indicated the need for a court battle to replace them.
The bolded statements above are why I posted. I have had the same experience at the high priced boutique bank wealth services division as well as with the cost conscious megacorp (V) Trustee. Getting away from the boutique bank did require court action.

I have seen several threads and many posts where well-meaning Bogleheads have been discussing this as an option for their disinterested spouse, handicapped child or other situation requiring services for the beneficiary. I have not seen these services available at either end of the spectrum in my very limited experience. The brochures and board room pitches are very different than the reality after the money actually lands (my signature is the result of my experience). I do believe irrevocable trusts have a place in an asset protection plan, I had hoped to use this in my own years of cognitive decline and perhaps the landscape will have changed by then and there will be better options, right now it would not serve that function. It is important that beneficiaries be able to move the trust, I did not mention earlier that there is another one for my mother where she is the beneficiary and it is trapped at the regional bank, cannot be moved, and has been utterly useless for the last five years (at 1.25 AUM). I have had to use other resources to take care of her needs, she has advanced dementia and is completely dependent on others to manage her financial and other needs 24/7. In this case the trustee has failed and I have stepped in.

Right now I am not seeing better options, I only hope that the financial services industry develops better tools in the future.
The large print giveth and the fine print taketh away.
afan
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Re: Vanguard vs Fido vs Schwab as corporate trustee

Post by afan »

Hoping Gill and bsteiner will contribute their expertise.

I gather that Gill was able to use his decades of experience to interview prospective trustees and decide which ones would do the kind of job he wanted. It is not clear whether that can be taught to lay people or requires a long time trust officer looking at the operations of various bank departments to see how they work.

Gill,
Can you advise us on how to determine whether a trust company or bank will do a good job? Or at least what to look for?

Bsteiner,
I assume you hear about problems when they get serious enough that clients are looking to change companies. Anything to watch out for when shopping? Are you able to steer your clients to companies that will provide good service?
I had not heard of large fees to leave a trustee. Is that common? Or should we walk away if we see that in an agreement?
If the beneficiaries have the right to change trustees, what can we do to ensure they do not face resistance of high expenses when doing so?
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: Vanguard vs Fido vs Schwab as corporate trustee

Post by afan »

If quality is a crapshoot either way, I would rather pay 0.55% of assets for lousy service than 1.5% of assets for lousy service.
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
Fractalleaf
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Re: Vanguard vs Fido vs Schwab as corporate trustee

Post by Fractalleaf »

It is important that beneficiaries be able to move the trust
Can anyone suggest how this is phrased in the trust? Does the clause have contingencies, such as only allowed under certain circumstances? If an asset protection trust is created due to a beneficiary’s vulnerability, doesn’t allowing them to transfer control to someone else put them at risk from predatory “advisors”, such as the many boutique wealth management firms with slick sales pitches?
Kompass
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Re: Vanguard vs Fido vs Schwab as corporate trustee

Post by Kompass »

Fractalleaf wrote: Sun Aug 23, 2020 2:15 pm
It is important that beneficiaries be able to move the trust
Can anyone suggest how this is phrased in the trust? Does the clause have contingencies, such as only allowed under certain circumstances? If an asset protection trust is created due to a beneficiary’s vulnerability, doesn’t allowing them to transfer control to someone else put them at risk from predatory “advisors”, such as the many boutique wealth management firms with slick sales pitches?
In the case of my trust the language is specific but also very inclusive (any bank, attorney, CFP, accountant, trust company, anyone licensed by the state to conduct this business...) and yes that leaves the door open to all sorts of charlatans. I believe this paragraph is boilerplate. This makes me very uneasy and slow to act; also fearful of my own potential cognitive decline and subsequent gullibility.

I think a more limited set of parameters would be helpful but an exit is still needed in case of bad faith or circumstances like a sale of the business etc. The boutique pitches are very convincing. I have not seen it mentioned that as soon as the money is transferred the impressive people disappear and the least experienced person is given the account to train on. This happened to me at both the boutique bank and also at V.

I should mention that I was very happy with V for the first 10 months until the mistakes started which impacted taxes among other things. I am still satisfied with the investing side at a clean 5 holdings.
The large print giveth and the fine print taketh away.
afan
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Re: Vanguard vs Fido vs Schwab as corporate trustee

Post by afan »

Our documents require that any replacement trustee be regularly in the business of serving as a corporate trustee and have a minimum level of assets. That minimum is high enough that it probably would exclude many boutique shops. Of course, using a large bank is no guarantee of quality.

I have assumed what I don't want to have what the bank would consider a small account. I would like to be average, if possible. Don't have enough to be a large account at any decent sized company. If the median account is $10M and yours is their minimum of $3M, then you probably want a different bank.

If the median account is $3M and yours is $10M, then you may get good service by the standards of a small shop.

Some of the biggest and highest touch companies have huge minimums and fees. I don't know how happy their customers are but at those prices I hope the get good service.

At some point, when the assets are much more than the beneficiary will need, you could be happy paying high fees, compromising return, in order to get the service.

But funding that service, at any price, seems to be a challenge.

Kompass,

Can you elaborate on what some of the problems have been?

Are you working with an attorney? If so, do they have suggestions?
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
bayview
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Re: Vanguard vs Fido vs Schwab as corporate trustee

Post by bayview »

Kompass wrote: Sun Aug 23, 2020 2:57 pm I should mention that I was very happy with V for the first 10 months until the mistakes started which impacted taxes among other things. I am still satisfied with the investing side at a clean 5 holdings.
Kompass, did they pick the funds, or you? If they picked them, did you have any input?
The continuous execution of a sound strategy gives you the benefit of the strategy. That's what it's all about. --Rick Ferri
bsteiner
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Re: Vanguard vs Fido vs Schwab as corporate trustee

Post by bsteiner »

afan wrote: Sun Aug 23, 2020 12:12 pm Hoping Gill and bsteiner will contribute their expertise.

I gather that Gill was able to use his decades of experience to interview prospective trustees and decide which ones would do the kind of job he wanted. It is not clear whether that can be taught to lay people or requires a long time trust officer looking at the operations of various bank departments to see how they work.

Gill,
Can you advise us on how to determine whether a trust company or bank will do a good job? Or at least what to look for?

Bsteiner,
I assume you hear about problems when they get serious enough that clients are looking to change companies. Anything to watch out for when shopping? Are you able to steer your clients to companies that will provide good service?
I had not heard of large fees to leave a trustee. Is that common? Or should we walk away if we see that in an agreement?
If the beneficiaries have the right to change trustees, what can we do to ensure they do not face resistance of high expenses when doing so?
As often as not it's the beneficiaries who have unreasonable expectations.

Except for very small trusts where you're dealing with the 800 number, or trusts that come in through a retail broker and are administered in a different group, the service is usually good. If an issue arises, I can usually resolve it with the trust officer.

There aren't any large fees to change trustees. There will be some cost to preparing a release in which the beneficiaries release the outgoing trustee. In those states where the court issues letters of trusteeship for testamentary trusts (which I think is most states, though not Florida) there will be some cost to preparing a petition to allow the outgoing trustee to resign and the incoming trustee to be appointed. If someone wants an accounting, there will be some cost for that, though that cost would be incurred sooner or later in any event.

If a beneficiary has the power to change trustees, there won't be any resistance.

Of course, the beneficiaries might not do any better with a different bank or trust company. If the current beneficiary wants a higher level of distributions than the bank or trust company thinks is reasonable, the next one might see it the same way.
BuddyJet
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Re: Vanguard vs Fido vs Schwab as corporate trustee

Post by BuddyJet »

My father put a provision in my trust that allowed the corporate trustee to be changed with one notice.

This substantially prevents trustee shopping for a positive response. It also is a way to decline investment requests from family.
People say nothing is impossible. I do nothing all day.
Kompass
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Joined: Sat Oct 01, 2016 5:42 pm

Re: Vanguard vs Fido vs Schwab as corporate trustee

Post by Kompass »

The problems that I have had with Vanguard specifically have been relating to them missing tax deadlines in regards to DNI annual sweeps which are recommended by my accountant, this resulted in higher taxes for me two out of three years, they apologized and did nothing else. I have had several other non-financial administrative headaches as well.

When the portfolio was being set up they asked for my opinion on what I had in mind. What I had in mind matches their investment philosophy, what they set up was what I had hoped for and I am satisfied with it. I do not think that my opinion had any effect.

I don’t know how regular distributions are handled, I have never asked for any. I regard this account to be a back up plan for later years and asset protection.

I had no intention of derailing this thread, apologies. The OP requested input from current trust customers so I weighed in. Carry on..
The large print giveth and the fine print taketh away.
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