Unparalleled Directed Trustee Services
Our focus is providing tailored solutions to every individual client. Every trust has a unique set of requirements, assets, beneficiaries and fiduciaries. Our success is a result of our attention to the details of each distinctive feature of a trust plan while working collaboratively with the client and the other trust professionals to make sure that trust administration is efficient, economical and result oriented.
Why Set Up a Trust
The concept of a trust is that legal ownership of a portion of an individual’s assets are transferred to the trust. The new owner of the assets is the trust and its trustee, while the beneficial ownership (or the right to enjoy the benefits of the assets) is transferred to the beneficiaries (that individual or class of individuals named within the trust document).
The Purpose of Trust Planning
The goal of trust planning is to allow an individual to sufficiently separate themselves from the asset such that the title and rights of ownership are transferred. Dependent upon the level of separation and the jurisdiction in which the trust is established, one can:
- Protect the asset from future creditors
- Remove the asset from their estate and exempt them from future estate and generation-skipping transfer tax
- Protect the assets’ continued growth from state income taxation
If you and your advisers decide that trusts are the right decision for your assets, Commonwealth will be your trusted partner in all trust administration matters. Read more below about Commonwealth’s specific advantages as a directed trustee.
Directed Trustee Services
The directed trustee statute has been around for more than twenty years in Delaware though the concept has been around for more than a century. In addition to the standard third-party trustee, these original directed trusts involved advisers (typically a family member or business associate) who would direct the trustee in matters related to the family business, determine the appropriate time to sell an asset or otherwise dispose of it, or simply provide guidance to a trustee with regard to family matters. Today this concept of split duties continues through the use of state directed trustee statutes.
The directed trustee difference
Under Delaware’s directed trustee statute, there is a complete bifurcation of trustee duties, between the trustee and the adviser. This structure allows a Delaware trustee to be solely an administrative trustee, which comes with a limitation on duties the administrative trustee can perform. Commonly accepted administrative duties performed by the directed trustee include:
- Maintaining or arranging for custody of accounts
- Maintaining storage of tangible property & evidence of intangible property
- Keeping trust records
- Providing office for trustee meetings
- Trust accountings & communications
- Responding to inquiries
- Executing documents and authorizing trust account transactions
- Retaining Advisers in connection with the performance of the Administrative Trustee’s duties
- Preparing or reviewing trust income tax returns
Delaware is one of few states with a strong directed trust statute. Its statute is an enabling statute, allowing the trust document to define the relationship between the directed trustee and the direction adviser. As a strong statute, it includes the essential concepts of (1) a limited liability standard applied to directed actions, (2) no duty to warn beneficiaries if the trustee may have acted differently so as to avoid second-guessing the direction adviser, (3) an on-going duty amongst the acting fiduciaries to keep each other informed to provide smooth administration of the trust, and (4) an acknowledgement of each fiduciary’s submission to the Delaware Chancery Court.
As a directed trustee, Commonwealth focuses on administering each trust properly and professionally. We specialize in superior professional trust administration services while allowing our clients to maintain their existing team of wealth management, financial and legal advisers located all over the world.
Personal Trust Administration
What sets us apart from any other trust company is our specific focus on personal trust administration. We have taken advantage of the Delaware directed trust statute to focus our duties on all fiduciary responsibilities minus investment decisions.
Advantages of Our Personal Trust Administration:
Structure allows separation of investment and administration—the bifurcation of duties allows the traditional investment duties to be assigned to someone who can focus their attention solely on the investments of the trust, while we focus on the administrative duties. It also allows greater checks and balances for the grantor.
The grantor may maintain more control. When the investment powers and the administrative powers of the trustee are separated and assigned to two different fiduciaries, the grantor may gain more control by choosing each of those professionals and avoid the ultimate conflicts inherent in administering a trust when only one fiduciary is responsible for everything.
What does commonwealth do as an administrative trustee?
- Administers trust in accordance with the trust agreement
- Maintains trust records and subject to annual administrative review
- Manages fiduciary risk
- Ensures continuity of administration during time of grantor’s incapacity or disability, as well as in perpetuity
- Custodies or otherwise holds title to trust assets
- Maintains the trust’s Delaware situs & subject to regulatory review
- Maintains tax records, including tax basis adjustments
- Prepares, or arranges for the preparation of, and files fiduciary income tax returns and informational returns (FBAR, 3520, etc.)
- Provides annual tax information to beneficiaries
- Maintains principal and income accountings
- Maintains Trust Records
- Processes investment and/or distribution directions
- Processes expense payments
In many instances, Commonwealth is also the trustee with authority over distributions from the trust, wherein it applies the appropriate discretionary standard to make decisions in the manner established by the grantor of the trust.
We have decades of experience dealing with trusts of all types that have international issues, tax issues, and family dynamic issues. We have proven to be a valuable team member in helping to address and resolve these issues for our clients. We are able to respond quickly and expertly to trust administration issues and can generally turn distribution requests around quickly, without the delays caused by cumbersome approval committee structures.