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Financial Planning > Trusts and Estates > Trust Planning

Brokers Play A Pivotal Role In Trust Planning

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Several years ago, my husband was deployed with his National Guard Reserve unit to Kosovo for a year and a half, leaving me to oversee the home front with our young children.

Despite years in the corporate arena, I was taken aback at the prospect of going solo to keep my career and busy household running on all cylinders. My experience as a trust professional gave me a sense of what it must be like when spouses lose a partner to illness, accident or long-term incapacity, and why having a trust can be so helpful to a survivor’s well being.

Brokers, along with the client’s attorney and CPA, are often key advisors to a family and can assist family members in recognizing the need for a trust as part of an overall financial plan.

Brokers are often in direct and regular contact with the client and have a good foundation regarding the client’s goals and financial situation. That enables brokers to coordinate a client’s financial situation and be ready when the client faces trying times. Furthermore, a family’s trusted broker can manage investments within trusts.

A corporate trustee can help a healthy spouse who, in circumstances of high emotion and high stress, is suddenly overwhelmed with medical decisions, visits to the hospital/nursing home and the general stress of caretaking. It is a great comfort for the healthy spouse to know that the trustee, for instance, will conduct the laborious task of weeding through medical bills and paying only that portion for which the insurance company is not responsible.

Brokers play a large role by continuing to invest the assets in the trust based on their historical and in-depth knowledge of the client’s family, so there is a smooth financial transition during this stressful time. The best time to make these most crucial financial and estate planning decisions is, of course, before anything bad happens.

If your clients need a trust, they will need to decide who will serve as trustee. As the financial services industry matures, clients need to be aware that they have more to choose from than in the past. Good brokers usually are affiliated with, or have access to, trust services to ensure they can manage their clients’ wealth and safeguard their portfolios from cross-selling bankers.

A good time for the broker to get to know the client’s attorney and accountant, and any other professional advisor to the family who is taking part in decisions, is during this planning phase. It is often easier to meet with these professionals early, rather than later during a stressful time in a courtroom or a hospital corridor.

What else can brokers do to make trusts a part of their estate planning services?

First, they should consider partnering with a trust company with which the client feels comfortable and should know that the company can assist with trust administration needs. They also should look for a company with degreed professionals. They don’t have to be lawyers, but some members should be certified trust and financial advisors. The CTFA designation shows a dedication to the field and, often, years of study and experience.

Today’s trustees need to be flexible, creative and knowledgeable about trust law. Of most importance, they need to have good people skills.

Also, they need to be able to ensure that clients are apprised of changes in the tax laws that affect trusts and estate planning. As the federal estate tax is presently written, the federal applicable exclusion (the amount an individual can pass tax free at death) is set at $2 million per individual ($4 million for a couple) from 2006 to 2008. The exclusion jumps to $3.5 million in 2009, goes unlimited in 2010 but dips back to $1 million per person in 2011.

For clients who have listened to politicians and feel that they don’t need to worry about the estate tax anymore–take heed! States have enacted their own tax laws. If your clients’ plans are not drafted for current laws, the state might get a big bite of an inheritance, even if the federal government only takes a nibble. (See Chart 2). The broker should thus consult with the client’s attorney and/or CPA to ensure the language of the client’s trust document is sufficiently flexible to deal with these tumultuous laws.

A trust can be an excellent vehicle for transferring wealth, lessening taxes and assisting families through difficult life experiences. When creating a trust, a caring and competent broker not only can provide investment advice but also can offer peace of mind.


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