Trust Investment Advisor: You can ensure that your family’s relationship with your trusted Financial Advisor continues after you are gone.

Picking a trustee is no easy task.  Trustees have immense discretion.  Trustees can steal if nobody is watching them.  As my boss likes to say, there are no “Trust Police.”

Certain businesses are capable of serving as a trustee.  Many banks have trust departments.  There are also businesses known as “trust companies.”  Other companies specialize in investments and have associated trust companies.  Businesses that are qualified to serve as trustees are known as “corporate trustees.”  My firm has strong relationships with a number of these companies.  They are pros.

Most often, trusts are utilized after you are gone to control your money for your spouse and/or children.  I frequently encourage clients to consider corporate trustees, particularly when the client does not have a relative or friend that they feel absolutely comfortable with naming as a trustee.

But what happens to your trusted financial advisor after you have passed?  Your advisor that you have established a relationship with and trusted with all of your deepest secrets…  Your advisor that knows your family through and through…

If you don’t have such a relationship with your advisor, then no big deal.  Likewise, if your trusted advisor works for or closely with a corporate trustee, then this relationship already exists and you need not read any further.

Many corporate trustees want all or nothing. If they cannot invest the trust’s assets, then they do not want the relationship. Frankly, this often makes a lot of sense.

But what if you want your family to be able to maintain the relationship?

A number of banks and trust companies have expressed a sincere willingness to bifurcate the trust administration from the investment of the trust funds.  In fact, some trust companies simply do not invest trust assets whatsoever.

Likewise, financial advisors are generally not cut out to serve as trustee, at least not in the sense of administering the trust.  It’s just not what they do.

Why not let trustees and the financial advisors each do what they do best?  Let the trustees administer and let the financial advisors advise and invest!  Makes sense to me…

The 2013 amendments to the Tennessee Uniform Trust Code (“TUTC”) make this easier than ever.  Part 12 of the TUTC makes it clear, you can now ensure that your trusted financial advisor can maintain the relationship with your family after you are gone.   With careful drafting, this is also possible in other states.

In addition to naming a trustee, your trust can name a Trust Investment Advisor.  The advisor is guess who—your advisor.   Your Trustee is whomever you pick that is willing to accomodate this relationship.  This way, your advisor stays in the picture and continues and builds on the relationship that they had with you.

If you think this is right for you, talk to your estate planning attorney or financial advisor about whether this makes sense for you and your family.

Stay tuned.

Rob Malin

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