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Financial Planning > Trusts and Estates > Trust Planning

It's a Matter of Trust

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Thanks for a great article on Trust Services “The Trust Threat” (Clark at Large) in the January 2007 issue. Let me start by saying that I am a shareholder in National Advisors Trust Company.

I saw the need back in 1999 when we started to form National Advisors Trust Company, at great risk to some of my own capital, I might add. I can remember getting the go ahead for National Advisors Trust Company from the Office of Thrift Supervision in October 2001, one month after 9/11. Great timing.

National Advisors Trust Company was key in me obtaining a $4.5 million net worth widow’s account. The widow has five daughters, four sons-in-law, and nine grandchildren. We did a $1 million gift to an irrevocable trust that is under National Advisors Trust Company’s trusteeship. We also did $11,000/ $12,000 gifts to 18 descendants placed into the same trust for 2004, 2005, 2006, and soon for 2007. In addition, the widow is paying medical bills and tuitions directly for grandchildren.

Bottom line: She will have under $2 million in her estate in 2007, thereby eliminating estate taxes for her. She is, unfortunately, in an Alzheimer’s unit now.

Warren J. Mackensen, CFP

Mackensen & Company, Inc.

Hampton, New Hampshire

Not all trusts are created equally

I just read with great interest Bob Clark’s article “The Trust Threat” in the January 2007 Investment Advisor magazine. His premise that directed trusts can be an important tool for independent investment advisors to retain their clients is very relevant and important.

As most readers may or may not be aware, Delaware trust law provides the opportunity for a “direction investment advisor” to direct investment decisions, leaving the trustee to administer the other important matters concerning the trust beneficiaries. In a Delaware direction trust, the trustee does not have investment oversight responsibility, though the trust does benefit from all of Delaware’s other favorable tax laws. These include:

  • Exemption from state income tax on accumulated earnings and capital gains if there are no remainder beneficiaries who are Delaware residents;
  • Permission of perpetual “dynasty” trusts;
  • Use of Total Return Unitrusts;
  • Spendthrift statutes;
  • Asset protection;
  • Confidentiality protection since trust court filings are not required;
  • A Court of Chancery with over 250 years of legal precedent in trust and corporate law.

Wilmington Trust is the leading provider of directed trust services in Delaware. We have partnered with several major investment firms, as well as independent financial advisors throughout the country. In addition, we have tremendous depth of fiduciary expertise that will ensure that new trusts are taking full advantage of Delaware’s favorable trust laws or help with the process to change an existing trust to a Delaware trust.

Please let me know if I can be of any assistance to you or your contacts to provide Delaware direction trust services.

James J. Palermo

Private Client Advisor

Wilmington Trust

Wilmington, Delaware


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