Trust companies. Layered fee's and trust administration

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills.
Post Reply
Topic Author
hero4u2b
Posts: 55
Joined: Thu Jul 09, 2015 9:01 am

Trust companies. Layered fee's and trust administration

Post by hero4u2b »

[2015 thread bumped in 2021 --admin LadyGeek]

Hello. I am wondering if there are any trust beneficiaries here that might recommend a reputable trust company or someone who might do both, administrative work as well as invest the portfolio who isn't going to layer fee's. charge inside management fee's ect. I have been debating nominating an independent fee only adviser who is registered with the https://www.napfa.org/ people to act as trustee as well as manage the portfolio. This would be less costly and their custodian would be TD ameratrade but I am not extremely knowledgeable in this and also would like protection that a large trust company may provide. The man has agreed to disclose all fee's up front prior to engagement as successor trustee and I feel somewhat confident with him but I do not want to regret anything later on. Any suggestions and or advice will be appreciated. Thank you
FCM
Posts: 284
Joined: Sun Jan 25, 2009 6:28 pm

Re: Trust companies. Layered fee's and trust administration

Post by FCM »

My wife and I set up a trust with Vanguard National Trust Company (VNTC) as the successor trustee to manage our investable assets for our beneficary in case we die prematurely. Have you considered VNTC? Their management fee is very reasonable.
Topic Author
hero4u2b
Posts: 55
Joined: Thu Jul 09, 2015 9:01 am

Re: Trust companies. Layered fee's and trust administration

Post by hero4u2b »

I have spoken either directly or via e mail to several trust companies and many of them advertise low fee's. One was even.37 basis points but you also get into their legal team fee's, CFP fee's, not to mention internal investment fee's. Many propose moving the situs to the state they're licensed in which can result in more legal fee's, I am at a loss. I feel I am fairly protected under the trust documents although I am under the assumption that anyone is going to charge the trust fee's , legally, wherever and however they can. The CFP I am thinking about nominating is obligated under oath as a registered NAPFA member to operate with transparency and to put their clients needs above their own when it comes to conflict issues. Then again where is the enforcement with this? This is what he wrote me in regards to internal management fee's
I buy mostly stocks and bonds for each portfolio and I round out the portfolio with a few exchange traded funds (for diversification). After the original cost of the trades ($ 9.99 for stocks, $0 for Bonds) there will be no internal fees for the stocks or individual bonds. The Exchange Traded Funds (ETF’s) have a small expense ratio of approximately 10 bps to 25 bps but the ETF’s make up a small portion (10 to 20%)of the portfolio. The overall annual fee for the Trust will be approximately 1.10% ( 1.0% management fee and .10% for the ETF annual expense ratio)
I do not think under the trust documents he can outright steal and I know his custodian is TD Ameratrade but I am concerned as the beneficiary. If he and I engaged in some kind of personal conflict I fear the legal fee's I would incur from the attorneys who my father hired to write the trust up might mount up in his removal Thank you
User avatar
patrick013
Posts: 3301
Joined: Mon Jul 13, 2015 7:49 pm

Re: Trust companies. Layered fee's and trust administration

Post by patrick013 »

Is it mandatory to have a trustee and a CFP type of investment
advisor ?

Can you put in the trust documents what to invest in ?

Even some advisors don't make high returns, so hiring
an advisor or being worried about it so much, could a
waste of energy. Are you looking for active-aggressive
or income-growth type of an advisor ?
age in bonds, buy-and-hold, 10 year business cycle
Gill
Posts: 8221
Joined: Sun Mar 04, 2007 7:38 pm
Location: Florida

Re: Trust companies. Layered fee's and trust administration

Post by Gill »

I don't know what kind of layered fees you're talking about. A corporate trustee receives a fee as trustee and generally reduces that fee for any compensation received on investments made in the trust. Of course you are going to have legal fees in establishing a trust but that is separate and apart from the feel of the trustee.
Gill
Cost basis is redundant. One has a basis in an investment | One advises and gives advice | One should follow the principle of investing one's principal
Topic Author
hero4u2b
Posts: 55
Joined: Thu Jul 09, 2015 9:01 am

Re: Trust companies. Layered fee's and trust administration

Post by hero4u2b »

The trust has been established already and in existence since 1988 and I am the beneficiary. My father died in 2007 and it became irrevocable. When I say layered fee's I mean first there is administration fee's ( the trustee. his duties) There are legal fee's and then you get into possibly custodian fee's/ broker fee's and God knows what else there might be. I know a CPA has to do a K1 each year for trusts and estates. These fee's can mount up quickly and something I would like to avoid. To answer the other question the current trustee is a woman who worked for my father is his later years and the co trustee is and his wife. They have decided to resign so I am to nominate a qualified independent successor. It doesn't have to be a corporate trustee with a bank or an attorney but someone who is familiar with the uniform trust codes and the prudent investor rule. Personally I am trying to avoid a corporate trustee because of multiple fee's from everyone from the trustee down to the CPA. I know a regular CFP who works with a broker cannot serve in that role because of potential conflict of interests but a CFP who is registered on the fee only association website has taken an oath to act in the best interests of his clients and to operate as a fiduciary or RIA. I am still learning how all this functions and only want to nominate someone who has the best interests at heart but I feel quite sure anyone who assumes the role as trustee is going to want to profit from that role. Thank you
Gill
Posts: 8221
Joined: Sun Mar 04, 2007 7:38 pm
Location: Florida

Re: Trust companies. Layered fee's and trust administration

Post by Gill »

You should have nothing more than trustee's fees and possibly attorney fees. If you are paying anything other than these you are not talking to the right trustee. All the other fees you describe are generally incorporated in the trustee's fee.
Gill
Cost basis is redundant. One has a basis in an investment | One advises and gives advice | One should follow the principle of investing one's principal
User avatar
patrick013
Posts: 3301
Joined: Mon Jul 13, 2015 7:49 pm

Re: Trust companies. Layered fee's and trust administration

Post by patrick013 »

Gill wrote:All the other fees you describe are generally incorporated in the trustee's fee.
Gill
Yes, the trustee does the taxes anywhere, even at VG. Odd the trust needs
a "prudent investor", is there any way to stop that ?
age in bonds, buy-and-hold, 10 year business cycle
Topic Author
hero4u2b
Posts: 55
Joined: Thu Jul 09, 2015 9:01 am

Re: Trust companies. Layered fee's and trust administration

Post by hero4u2b »

I have no idea. I asked my current trustee why after the crisis of 08-09 would we be seeing such low returns ( 2-4 percent) when my neighbor and many people are talking about a good straight 5 year run in the market where many people have been seeing returns up to 10 percent? If I had even seen 6-7 percent I would not complain but 2-4 ?. 2014 was our most productive year at 4 percent. Every year before that was 2-3 percent. I thought because it was a trust they had to operate accordingly and invest prudently and I have read the prudent investor man rule but the CFP who manages the portfolio is a highly respected, Barron's listed woman but she is dually registered and works with LPL Financial ( who has numerous complaints and has been fined millions of dollars for many issues) I have to think that she has recommended products on commissions or referral fee's that were just not productive and acting in her own self interest and not mine.
Gill
Posts: 8221
Joined: Sun Mar 04, 2007 7:38 pm
Location: Florida

Re: Trust companies. Layered fee's and trust administration

Post by Gill »

Your answer is to find a good corporate trustee, one who does all the work for a single fee. You don't need accountants, investment advisors or anyone else other than perhaps an attorney when legal work is required.
Gill
Cost basis is redundant. One has a basis in an investment | One advises and gives advice | One should follow the principle of investing one's principal
User avatar
patrick013
Posts: 3301
Joined: Mon Jul 13, 2015 7:49 pm

Re: Trust companies. Layered fee's and trust administration

Post by patrick013 »

Well then the trustee was acting with your permission, but giving
you investment advise then. Anyway, some advisors get rich
quick and others end up with portfolios with small cap gains.

flip the coin on that stuff.

Some CPA's are registered advisors, ever talk to having a CPA as trustee ?

I'd make my own decisions investment wise, save money, use the trustee
as kind of a clerk.

Like I said for every person that bought Google IPO there's a million
people who didn't. :D
age in bonds, buy-and-hold, 10 year business cycle
Topic Author
hero4u2b
Posts: 55
Joined: Thu Jul 09, 2015 9:01 am

Re: Trust companies. Layered fee's and trust administration

Post by hero4u2b »

Thanks for the replies but I do not know a thing about investments but I do understand when other people and my neighbor is telling me he has been doing roughly 10 percent since 08-09 and I have been seeing much lower. I am in the process of presenting a CFP who is registered on the NAPFA website to act as trust and manage the portfolio. Of course the attorneys have to vet him and them appoint him. I hope it is a good idea. I know there are attorneys involved with this but they are only there to appoint and remove trustees. The trustee really wasn't acting with my permission. I have not been allowed as a beneficiary to speak with the investment adviser since 2009. The investment adviser's assistant would tell me that the adviser has been told only to speak with the trustee. Then the trustee recently tells me the adviser would rather only deal with the trustee. Thanks everyone.,
Topic Author
hero4u2b
Posts: 55
Joined: Thu Jul 09, 2015 9:01 am

Co trustee w/ reasonable fee

Post by hero4u2b »

[Thread merged into here, see below. --admin LadyGeek]

Hello everyone. I think I have found a trustee who will administer ( accounting distributions and K1 each year) and act as successor trustee but I am a bit leery as to having one person hold title to the trust and act as trustee/ investment adviser. I do not want to accumulate fee's from various people or institutions but I am thinking about having someone act as a co trustee who would be compensated at a reasonable fee. A separate entity so that one person does not hold all the power of the trust. I know because of guidelines a dually registered CFP cannot be permitted to do this because of conflict interests but a CFP who is registered on the NAPTA webiste who uses TD ameratrade as the custodian can. I feel good about having him manage the portfolio but should I seek out a trust company or possibly a CPA as someone suggested prior? Any ideas will be appreciated. Thank you
Gill
Posts: 8221
Joined: Sun Mar 04, 2007 7:38 pm
Location: Florida

Re: Co trustee w/ reasonable fee

Post by Gill »

You should continue your previous thread. I just notified the moderators.
Gill
Cost basis is redundant. One has a basis in an investment | One advises and gives advice | One should follow the principle of investing one's principal
bsteiner
Posts: 9208
Joined: Sat Oct 20, 2012 9:39 pm
Location: NYC/NJ/FL

Re: Trust companies. Layered fee's and trust administration

Post by bsteiner »

Perhaps the original poster could be a trustee, together with one or more family members, close friends, or business associates. They could then invest in a prudent manner as they thought best.

If that's not practical, a bank or trust company will charge about 1% (a little more on smaller trusts, less on larger ones). That includes managing the assets, custody, recordkeeping, deciding on discretionary distributions, and preparing income tax returns (though sometimes there's a modest separate charge for preparing the income tax returns).

The lawyer handling your estate planning should have good relationships with various banks and trust companies and should be able to suggest several that might be appropriate for the trust given its size (which you didn't specify).

Other than dealing with occasional trustee changes, there usually isn't very much ongoing legal work.
Last edited by bsteiner on Mon Oct 12, 2015 10:14 am, edited 1 time in total.
User avatar
LadyGeek
Site Admin
Posts: 95690
Joined: Sat Dec 20, 2008 4:34 pm
Location: Philadelphia
Contact:

Re: Co trustee w/ reasonable fee

Post by LadyGeek »

Gill wrote:You should continue your previous thread. I just notified the moderators.
Gill
Thanks, I moved hero4u2b's post (and reply) into here.

hero4u2b - In order to give you appropriate advice, It's best to keep all the information in one spot.

bsteiner - You may have missed the above post.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
bsteiner
Posts: 9208
Joined: Sat Oct 20, 2012 9:39 pm
Location: NYC/NJ/FL

Re: Trust companies. Layered fee's and trust administration

Post by bsteiner »

Lady Geek: thanks.

If the trustees don't want to handle the investments, they may hire (and pay out of the trust) someone to handle the investments. That decision is up to the trustees, though if the beneficiaries aren't happy about the cost, a court can decide whether the expense was reasonable.

A bank or trust company will charge about the same to handle the investments as if they were a trustee. Fees of other investment advisors may vary.
chinchillaz
Posts: 4
Joined: Tue Jun 15, 2021 9:16 pm

Re: Trust companies. Layered fee's and trust administration

Post by chinchillaz »

Hi, I'm new to this board. I'm wondering if anyone has any updates on this question? Which institution did you choose? What are the pros and cons? My parents left two irrevocable trusts with a Bank as trustee. We are having financial and ethical concerns with their ability to manage these trust and are working with a lawyer to try to change to a different financial institution. I would really appreciate recommendations-- we don't want to be in this situation ever again. One other question, is there an agency where one can file a complaint regarding a financial institution's management of a trust?
Post Reply