We are excited to announce that Fragasso Financial Advisors has partnered with National Advisor Trust Company (NATCO). This partnership will allow us to continue to be your family’s trusted advisor for generations to come. NATCO is a leading nationwide independent trust company, collaborating with advisors and the families they serve to provide experience, regulatory oversight, objectivity, service, safety, and soundness.
Why is this important to you?
We are currently amid the greatest wealth transfer in our country’s history. Older Americans have accumulated a record amount of wealth, especially Baby Boomers – those born between 1946 through 1964 – who have spent decades working hard to accumulate both liquid assets and real estate. They are now deciding what happens to that wealth after they pass away. It is estimated that 45 million U.S. households will transfer $68 trillion over the next 25 years, according to Cerulli Associates.1
The transition of wealth can be a time filled with many emotions and can seem overwhelming. Planning for a wealth transfer as early as possible provides the time and breathing space to make sure the right structures and parameters are in place. A holistic approach to family assets that combines investment management with financial, tax, and estate planning allows for a process that leaves no stone unturned. Everyone, regardless of family dynamics or financial status, can benefit from having an estate plan in place.
Estate plans encompass more than just a document that designates who gets what after somebody passes away. Many times, trusts need to be incorporated into an estate plan to ensure the trustors wishes are carried out. Early on, trusts were regarded only as a tool available to the ultra-wealthy. While this was true for many years, people have discovered that trusts can be useful for almost any socioeconomic class.
Trusts were established to provide legal protection for the trustor’s assets, to make sure those assets are distributed according to the wishes of the trustor, and to save time, reduce paperwork and, in some cases, avoid or reduce inheritance or estate taxes.2 Legal experts have seen more changes in trust law in the past 20 years than the last two centuries. These changes center mostly around who will perform the duties related to the trust.
It may seem daunting, but it does not have to be.
There are a lot of decisions that need to be made regarding who will perform which duties surrounding the trust. One of the most frequent questions asked during the process of creating a trust is “Is it better to have an individual or a corporate trustee?” It is extremely important to note that being an individual trustee is a serious obligation. The trustor needs to understand what they are asking of the trustee. Many think they simply need to choose someone they hold in high regard. However, the responsibilities of a trustee require specific skills, knowledge, and experience. It is not a role to be taken lightly and is more time consuming than one would think.
Some examples of a trustee’s duties include but are not limited to:
• protecting and distributing assets
• managing investments
• paying debts
• liquidating assets when needed
• managing cash flow needs
• resolving beneficiary disputes
• keeping records
• completing tax returns
• communicating with CPA’s, attorneys and other professionals
Being a trustee also comes with a fair share of liability if they breach their fiduciary duties. These trustee responsibilities can also last years into the future.
Another common question is, “If an individual trustee is not ideal, what type of corporate trustee should I use?” Historically, banks have been named as corporate trustees by those with prior relationships with a particular banking institution or for those who saw advantages in a “one stop shop” for both trustee services and investment management. This type of arrangement often left a client feeling stuck and frustrated in a situation where they were unhappy with one or the other but unable to separate the duty of the trustee and the investment management. As a result, the directed trust arrangement came to be 20 years ago.
The directed trust approach separates the duties and responsibilities of the trustee and the investment advisor. Both are appointed as fiduciaries. The advisor is charged with prudent investment management and is held responsible for how the investments perform. The trustee is accountable for all trust administration duties and held responsible for their execution. This bifurcation of duties allows for both professionals to bring forth their expertise. It also helps to align the interest of all parties while minimizing potential conflicts. The directed trust model allows you to continue to collaborate with your financial advisor with whom you have built a trusting relationship. Having your trusted financial advisor present through that time of change can ease the stress of all parties involved, helping to execute your wishes for wealth transfer for future generations.
What you can expect from us.
Fragasso now has a directed trust arrangement with NATCO. This partnership was ultimately designed to better execute the overall goals and intensions of your estate plan and help to facilitate the transfer of your wealth to future generations or charitable organizations.
Please reach out to your financial advisor at Fragasso to help review your needs as your circumstances change or evolve. It is important to review your estate planning needs and existing plans every 3 to 5 years or when major life events occur, such as marriage, the birth of a child, divorce, the receipt of an inheritance, or a death. We are here to guide you every step of the way and work with you and your other professional advisors to fashion a plan that uniquely meets you goals and objectives.