As a financial advisor, your role commonly extends into areas of your client’s lives beyond financial returns, especially among high-net-worth families. You may find yourself serving as a voice on legacy and the future. You might also field questions about the selection of a trustee.
Whether you’re providing input on establishing a new trust or helping a client reassess their current trustee, you want to ensure that every aspect of a client’s trust is managed with the same care and attention you bring to their overall financial plan. Cumberland Trust offers a solution that can align with this goal.
As a directed trustee, Cumberland Trust partners with you, enabling you to manage your clients’ trust-held investments while we handle the specialized aspects of trust administration. This partnership strengthens your relationship with your clients and ensures that their trusts are administered with the highest level of expertise and responsiveness.
In this blog, we’ll compare common trustee models and the advantages of partnering with Cumberland Trust to provide your clients with a personal and tailored experience that meets the unique needs of each family.
Comparing Different Trustee Arrangements
Choosing a trustee can profoundly impact the effectiveness of the trust administration. The most common arrangements include:
- Corporate trustees: often associated with large financial institutions
- Individual trustees: typically close family members or friends
While these options are prevalent, they may not always be the best option for beneficiaries over time. Understanding these options and how they compare to the directed independent corporate trustee model is crucial for financial advisors guiding their clients.
Corporate Trustees
Traditional corporate trustees manage both the investment of trust assets and the administrative responsibilities. This “one-stop-shop” model is appealing at the outset because it seems to offer a streamlined and secure approach. Families often choose traditional corporate trustees when they want a single entity to handle everything, believing the institutional reputation and resources will ensure reliable trust administration and investment management.
However, beneficiaries may find their corporate trustee is hard to reach or lacks the attentiveness needed to meet their evolving needs. Communication gaps are common, and the rigid structure of large institutions may lead to beneficiaries feeling disconnected from their trustee and dissatisfied with the management of their family’s trust and investments. As a result, families who initially chose this model for its perceived security may find themselves looking for more accommodating alternatives.
Individual Trustees
This choice is rooted in the belief that someone who knows the family intimately will act in their best interests. Individual trusteeship is particularly common in estate plans where the grantor believes that a family member or friend will best understand the nuances of their wishes.
Despite the good intentions behind this choice, family members or friends serving as individual trustees may lack the necessary experience and technical knowledge required to properly administer a trust. Additionally, individual trustees may not fully understand the fiduciary responsibilities required by the role, which can result in conflicts of interest or errors in trust administration. Over time, the burden of responsibility can strain personal relationships and create tensions within the family, especially if the trustee cannot effectively meet the beneficiaries’ needs.
Independent, Directed Corporate Trustees
In contrast to traditional corporate and individual trustees, the independent corporate trustee offers a solution that combines professional expertise with personalized service. A corporate trustee operating under a directed trustee model, like Cumberland Trust, specializes solely in the administrative aspects of the trust, allowing for the prioritization of beneficiary support and flexible solutions. This arrangement can be particularly beneficial for families who have established strong relationships with their financial advisor because it allows the advisor to continue to manage the investment of the trust assets. In fact, financial advisory firms can add an additional layer of safeguards to trust accounts by overseeing invested assets and account activity.
This model also provides the necessary professional oversight and infrastructure, ensuring that all fiduciary responsibilities are met without the personal conflicts or administrative errors that can occur with a family member or friend serving as trustee.
How Cumberland Trust Partners With Financial Advisors
At Cumberland Trust, we maintain a lower trust officer-to-client ratio to offer a superior level of service and build meaningful relationships with beneficiaries and their financial advisors. This personalized approach ensures the trust is administered with expertise and a thorough understanding of the family’s unique needs and values.
Seamless Integration
When financial advisors partner with Cumberland Trust, they gain a dedicated team that seamlessly integrates into their existing client relationships. Cumberland Trust’s primary role is to manage the administrative and fiduciary aspects of the trust, allowing financial advisors to maintain their focus on managing the trust’s investments. This clear delineation of roles helps avoid conflicts of interest. It ensures that the client receives specialized attention in both areas — enhancing client service without overstepping boundaries or disrupting the advisor-client relationship.
Example: Consider a scenario where a client’s trust includes a family-owned business with complex operational and tax considerations. Cumberland Trust and the financial advisor collaborate closely to address the challenges of managing this asset within the trust. Cumberland Trust handles the intricate administrative tasks, such as compliance and fiduciary responsibilities. At the same time, the financial advisor manages the investment strategies, ensuring they align with the family’s financial goals.
Flexibility and Client-Centric Service
Cumberland Trust is committed to providing flexible, client-centric services that cater to each client’s unique needs, even within the same family. Unlike traditional corporate trustees who may follow rigid protocols, Cumberland Trust can often formulate creative solutions that better align with the specific circumstances and goals of each family it serves. This customization is particularly important when dealing with complex family dynamics or evolving financial needs.
Example: Imagine a family trust that spans multiple generations, with each generation having different financial needs and priorities. Cumberland Trust works closely with the financial advisor to adjust the trust administration strategies as the family’s circumstances evolve. This might involve reevaluating investment strategies, modifying distribution plans, or addressing new financial challenges as they arise. Through continuous communication and a flexible approach, Cumberland Trust ensures that the trust remains aligned with the family’s long-term goals while the financial advisor retains their essential role guiding the family’s financial future.
Addressing Specific Client Needs
Two key areas where Cumberland Trust’s expertise is particularly valuable are administering complex assets and Special Needs Trusts.
Administering Complex Assets
Cumberland Trust’s willingness and ability to handle complex or illiquid assets such as LLCs, real estate, and concentrated investments further distinguishes it from other trustee models. These assets often require specialized knowledge and careful management to ensure they contribute positively to the trust’s overall value and objectives.
Example: In a situation involving a family-owned ranch property held within a trust, Cumberland Trust worked closely with the financial advisor and an appointed asset manager to ensure that the ranch continued to operate and produce income while remaining compliant with all fiduciary obligations. Cumberland Trust took on the administrative burden, managing everything from legal compliance to land-use rights, allowing the financial advisor to focus on investment growth and financial strategy. This collaboration ensured the property remained a strong asset for the trust, benefiting current and future generations.
Special Needs Trusts
Cumberland Trust has dedicated teams that specialize in administering Special Needs Trusts, ensuring that beneficiaries receive the necessary care and financial support without jeopardizing their eligibility for essential benefits. These trusts require careful administration to comply with legal requirements and to ensure that funds are used appropriately to enhance the beneficiary’s quality of life. The trust officers work closely with the financial advisor and the family to tailor the trust’s administration to meet the beneficiary’s specific needs.
Example: In one case, Cumberland Trust successfully managed a Special Needs Trust for a beneficiary with significant medical and care requirements. By collaborating with the family’s financial advisor, Cumberland Trust ensured that the beneficiary continued to receive needs-based public benefits like Medicaid or SSI/SSDI, while also benefiting from additional trust resources to cover specialized care. This partnership allowed the family to feel secure in the knowledge that their loved one’s financial and medical needs were being met with the highest level of expertise and compassion.
What to Expect When You Partner With Cumberland Trust
Cumberland Trust’s partnership with financial advisors is built on a foundation of collaboration and a deep commitment to serving each client’s unique needs. Here’s how we work with you to ensure a smooth transition and ongoing collaboration:
- Initial Consultation and Assessment: We begin with a detailed consultation to understand your client’s goals, review their trust documents, and assess whether Cumberland Trust is the right fit for the client’s long-term objectives and family dynamics.
- Establish Roles and Responsibilities: We establish clear roles for Cumberland Trust, the financial advisor, any other professional advisor, and the client, ensuring everyone understands how they will work together during the life of the trust and communicate effectively.
- Seamless Transition and Onboarding: Our team handles all technical aspects of transferring the trust account, from document preparation to coordinating with existing advisors. We maintain open communication with you and your client throughout the onboarding process to ensure confidence and clarity.
- Ongoing Collaboration and Support: We conduct ongoing reviews of the trust administration, ensuring everything stays aligned with the client’s goals. Our team remains flexible and responsive, ready to adapt as the client’s needs evolve, ensuring continuous, high-quality service.
The process of partnering with Cumberland Trust is designed to complement your role as the financial advisor. We are uniquely positioned to work together to offer our mutual clients the highest level of expertise and service.
Schedule a meeting with Cumberland Trust today to discuss your client’s situation and how we can help.
Through a partnership with Cumberland Trust, you can strengthen your reputation as a trusted advisor who brings comprehensive, tailored solutions to your clients’ most important financial and family decisions.