- Who is Family Heritage Trust Company?
- What does Family Heritage Trust do?
- What is an "independent" trust company?
- What is a trust?
- What is probate?
- What are the most common trust terms and their meanings?
WHO IS FAMILY HERITAGE TRUST COMPANY?The Family Heritage Trust Company provides trust and investment services and has been qualified to do business in Maryland since 2007. It is locally managed by a group of legal, accounting and investment professionals from Maryland and Pennsylvania. The Family Heritage Trust Company is a trust service office of Midwest Trust Company, a Kansas non-depository trust company regulated and examined by the Office of the State Banking Commissioner of Kansas. Our primary focus is individuals and their families, their professional advisers, and endowment/foundation funds.
WHAT DOES FAMILY HERITAGE TRUST DO?Our mission is to provide clients a broad range of competent and professional fiduciary management services. These services include investment management, account administration and accounting, security safekeeping, bill paying, tax planning, performance measurement, and fund collection and disbursement. As a trust company, we are held to the highest standards of professional conduct and are subject to comprehensive regulatory oversight. Dual controls guide the management of client funds, and we have a legal obligation to oversee investment portfolios to ensure assets are managed according to client objectives and needs.
WHAT IS AN "INDEPENDENT" TRUST COMPANY?
The selection of a trustee is a critical decision to make in the financial and estate planning process, yet the decision is made frequently out of convenience or tradition. Often overlooked is the professional competence of a trustee to represent the stated interests of a trust and to exercise all of the required fiduciary duties that must be performed economically and without bias. In the past, national and regional bank holding companies and family or friends have managed trusts. But the emergence of independent trust companies has challenged the traditional sources of trust administration and investment services for the following reasons:
- An independent trust company has the autonomy and ability to exercise decisions and manage a trust in light of the governing document for all beneficiaries without the conflict of corporate interests often associated with large banks. This is in essence what a corporate, independent trustee should be.
- An independent trust company has a specific business focus and is staffed with experienced professionals who are dedicated to building and sustaining a close, personal relationship with their clients, their family members, and their professional advisors. Independent trust companies believe in partnership.
- An independent trust company is a regulated entity, and it must operate according to statutes that govern capital requirements and actions that fulfill the interests of a trust. Professional trustees are trained and experienced in performing the duties of a fiduciary. Often a family member or friend does not meet these requirements and is ill-prepared to perform the duties of an unbiased trustee.
- An independent trust company exercises the wishes and direction of a grantor and works closely with that grantor's attorney, accountant, or other appointed professional to help prepare a trust document that is absolutely aligned with the grantor's intentions and financial situation.
- An independent trust company will avoid "cookie-cutter" solutions and offer a high degree of customization of administrative services to meet a client's special needs. They take their responsibilities seriously, and routinely exercise their authority on behalf of their clients' best interests.
A client can save money with an independent trust company. Many of the professional services an individual would have to hire can be performed by knowledgeable trust professionals who can address many of the questions a person would have in creating a trust document. An attorney is certainly required to draft the trust documents, but up-front discussions with a professional trustee can save time and expense and benefit the trust creation process before an attorney completes the final document.
Security and asset safety is another reason to consider a professional trustee. Independent trust companies are held to the highest standards of conduct and are subject to comprehensive regulatory oversight. Additionally, client assets are not comingled with the capital of the trust company. Dual controls guide the management and distribution of client funds, and a trustee has a legal obligation to oversee the investment portfolio to ensure assets are managed according to client objectives and needs.
Finally, an independent trust company is an organization of individuals. An organization that, by its very definition and mission, is to oversee and ensure the client's wealth is managed and administered as intended. An independent trust company provides continuity from one generation to the next. Most independent trust companies are staffed by professionals who have already demonstrated competence in the fiduciary management business and this experience is a tangible benefit that can not be ignored. Furthermore, the management of independent trust companies typically have a financial commitment to the company and this vested financial interest ensures stability.
The appointment of a professional trustee is a decision to be made carefully and with thought. The pros and cons of employing a family member or a major bank that offers trust services as part of their menu of services is to be weighed against the benefits and clear purpose that independent trust companies offer. When confronted with this decision, ask yourself who is best positioned to represent your intentions and interests as the routine function of their daily business. An independent trust company is an objective and professional partner to achieve your wealth preservation and peace of mind.
WHAT IS A TRUST?A trust is a two-party agreement in which the owner of property or other assets (called the donor, grantor, or settlor) transfers the ownership to someone else (the trustee) for the benefit of one or more third parties (the beneficiaries, who are not typically considered parties to the agreement). As a financial tool, a trust provides for professional asset management in accordance with the needs and objectives of the trust beneficiaries. There are numerous trust vehicles available.
WHAT IS PROBATE?Technically, the term applies to the state legal procedure required for a decedent who died a resident of that state. The purposes include (i) determination that a certain document is in fact, the Last Will and Testament of the decedent; (ii) that it is strictly followed in distribution of estate assets; (iii) that certain costs and taxes are paid; and in certain states (iv) that real estate is properly included and distributed by the personal representative. It is important to add that the will determines the distribution of only those assets of the decedent that are owned by her or him individually, and for which there is no other inherent distribution mechanism or arrangement at death. For example, property that passes by beneficiary designation (such as life insurance and certain annuities), assets in a living trust, and assets owned in joint tenancy with right of survivorship, are "non-probate" assets. Over many years, however, the term probate has come to refer loosely to the entire process of settling an estate, from assembling and valuing all of the assets (probate as well as non-probate), through determination and payment of debts, expenses and taxes, to the distribution of the estate according to the terms of the will.
WHAT ARE THE MEANINGS OF THE MOST COMMON TRUST TERMS?
- Corpus. The principal of the trust; may also be called the trust fund, trust estate or trust property, as distinguished from the income earned by the principal.
- Estate Tax. A tax on the transfer of property at death, typically paid from the assets in the estate. The federal government and some states levy estate taxes.
- Fiduciary. The trustee of a trust, personal representative of an estate or conservator of the assets of a "protected person".
- Grantor. The person who creates and funds a trust; may also be called a donor, settlor, or creator.
- Inheritance Tax. A tax on property received from someone who has died; an inheritance tax is owed by the recipient as a legal matter, but is usually paid by the estate. Most states levy an inheritance tax.
- Inter Vivos Trust. A trust created while the grantor is still alive, which may be either revocable or irrevocable. Also known as a living trust.
- Irrevocable Trust. An inter vivos trust that cannot be changed or canceled by its creator.
- Prudent Investor Act. A statutory standard of conduct for fiduciaries to comply with regarding the management of assets held in a trust.
- Revocable Trust. An inter vivos trust that may be changed or canceled at the wish of the grantor Revocable Trusts are frequently called "living trusts" when the grantor is also the primary beneficiary. These types of trusts typically do not carry estate tax benefits.
- Sprinkling Trust. Sometimes called a spray or discretionary trust, empowers the trustees to distribute assets and income as needed, often unevenly.
- Testamentary Trust. A trust created under an individual's Will.
- Trustee/s. The person or persons charged with carrying out the wishes of the trust's creator. Holds legal title to the trust assets, and must use them only for the benefit of the beneficiaries.
- Unified Credit. The dollar-for-dollar credit against the estate tax. The unified credit increases periodically until the year 2010 at which time congressional action will be needed to continue the estate tax break.