Protecting Your Assets With An Advisor-Friendly Trust
by Abdul Aziz Mondal Finance 15 April 2023
Trusts can be a powerful tool for advisors to deepen their client relationships. But finding an independent corporate trustee to partner with can be a challenge.
Selecting a trust-friendly state can give advisors an advantage over the competition for high-net-worth clients and build their relationships with existing clients. South Dakota offers advisors a dynamic trust law open architecture solution.
Trust Administration
You’ll receive person-to-person customer service and support when you work with a trusted company created just for you.
A trust company can help you develop new accounts by assisting in account transfers from bank trust departments to RIA custodians; co-producing luncheons, seminars, and other events to help recruit new business; providing marketing support materials; offering integrated technology that shows clients the value of their assets using the trust company’s system; offering a hotline for clients with trust questions; and adding trust education to advisors’ other services.
An independent advisor friendly trust company is a non-custodial, trustee-only trust company that partners with financial advisors instead of competing for assets under management.
These companies realize that a client’s trusted financial advisor best provides investment management and trust administration is best provided by an independent corporate trustee in a tax-favorable jurisdiction. They offer flat trustee fees, separation of duties, and greater client flexibility than traditional trust companies competing for both sides.
Trust Accounting
Regarding trust accounting, numerous rules and laws must be followed. The ramifications of violating them can be severe, including disbarment.
To keep up with all of this, you need to find trusted software that will help you track the funds coming in and out of client trust accounts and remain compliant with your state bar rules.
You should also verify your trust accounts monthly by doing a three-way reconciliation. This will ensure that all of your accounting records are consistent and accurate.
It is essential to know when you should use trust accounting and when you should use a more traditional approach to handling trusts. This will allow you to provide a comprehensive service to your clients while minimizing the risk of legal trouble down the road.
Trust Litigation Support
Having an experienced and effective trust litigation attorney on your side is crucial when you have a dispute with your trustee. This can include a trustee who needs to communicate better or provide you with all the information you need to understand the administration of your trust.
Trustees in bad faith can be sued for breach of fiduciary duty and may be required to repay the beneficiaries for property wrongfully taken from the trust. This could be money, stocks, mutual funds, or real estate.
A lawsuit against a trustee can be a long and expensive process, including a trial. Depending on the circumstances, there are often tens of thousands of dollars in costs and expenses that can be incurred during the case.
Compliance Support
Managing trust assets for independent financial advisors was once an overwhelming task. Learning the ropes required a dedicated mind and a large band of time.
The good news is that there is a roadmap to guide financial advisors through this challenging process today. It is available from an advisor-friendly trust company.
As the nation’s largest independent broker-dealer*, LPL Financial provides independent financial advisors with the research, technology, compliance, and clearing services they need to grow and create several thriving practices.
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