Common questions about our trust, estate and retirement planning solutions
What is a trust?
A trust is a property arrangement in which a trustee, such as a person or a bank trust department, holds title to, takes care of, and, in most cases, manages property for the benefit of someone else. The creator of the trust is called the trustor and is also known as the settlor or grantor. The bank, as trustee, charges a modest fee for its services, generally based on the market value of the assets.
Do I need to be wealthy to benefit from a trust?
Trust accounts vary from a few thousand dollars to millions of dollars. Generally, anyone whose property totals more than $100,000 should investigate the possibilities offered by trusts. Included in the calculation of property are the current value of a home or real estate, savings, stocks, bonds, life insurance and all other assets. Many people are quite surprised to learn what all of their property is worth today.
What is a living trust?
A living trust, also called an "inter vivos" trust, becomes effective during the trustor's lifetime and is created by a "trust agreement". A living trust may be revocable or irrevocable, each has different legal stipulations and offers varying advantages.
What are revocable trusts?
A revocable trust, as the name implies, may be revoked or changed by the trustor at any time. Revocable trusts offer no income tax advantages, but assets titled in a trust are not subject to probate in Colorado. An individual may act as their own trustee, or may appoint the bank to act, either from the outset, or as successor.
What is an irrevocable trust?
Once established, an irrevocable trust cannot be revoked or modified in any way. An irrevocable trust may have estate tax advantages, and it allows trustors to pass their wealth on to family members with written guidelines for future distributions.
What is a testamentary trust?
A testamentary trust is established by a Will and becomes effective after the death of the testator. Depending on its terms, a testamentary trust may provide tax advantages, but more importantly it gives the trustee direction on distributions to the beneficiaries. These play an important role in estate planning for people with minor children, family with special needs, or complex family relationships.
Not all of the trust department's services require a trust account, do they?
In addition to administering trusts, the bank also offers an Investment Management Account. The client may choose to manage their own investments or take investment advice from the bank while taking advantage of the trust department accounting system, income collection and cash sweep features to maximize cash flow and simplify recordkeeping. This type of account has a standard agreement and will distribute directly to your estate on death.
How will I be able to keep up to date on my investments?
Statements are produced on a cycle which best meets your needs, but most commonly statements are mailed to clients quarterly on the calendar quarters. Clients may also choose to have online access to information on their portfolio and trust account activity through a link on the bank's web site.
What services can I expect from the bank as trustee or investment manager?
Our trust services include:
- Consultations with clients and their advisors
- Safekeeping of assets
- Collection of income, maturities, and other amounts due
- Portfolio management
- Quarterly accountings, including transaction and asset detail
- Online access to portfolio detail and activity, if desired
- Distributions, based on the trust provisions and needs of the beneficiaries
- Coordination with tax preparers
Does everyone need a Will?
Normally, every adult should have a Will. The consequences of dying without a Will, also known as intestate, can be unfortunate. State law, not the individual's wishes or beneficiary needs, will determine who receives the assets from an estate.
How often should I update my Will?
In the event of a life changing event in your family, such as a birth, death, marriage, divorce, or change in family circumstances, your Will should be reviewed. Because tax, and other applicable laws change periodically, it would be advisable to have your Will or estate plan reviewed every 3 to 5 years.
Can the bank draw up my Will or trust agreement?
The bank, through its officers or employees, does not draft Wills, trust agreements, or other legal documents for its customers. The bank recognizes that is solely an independent attorney's responsibility to prepare all legal documents and to determine when revision is necessary.
Can the bank help me find an attorney to help with my Will or estate plan?
If you request a referral to an attorney, the policy of the bank is to provide you with a list of not less than three attorneys or firms known by the bank to be capable and responsible, and who are specialized in this area.
What happens to my estate when I die?
Your Will names the personal representative who will oversee the settlement of your estate. (For persons who die without a Will, the court appoints an administrator whose duties resemble that of the personal representative.) The personal representative is responsible to all beneficiaries and the court for collection of assets, payment of expenses and taxes, filing of tax returns, and proper distribution in accordance with the provisions of the Will.
Estate settlement can be quite lengthy, but good estate planning and careful selection of a personal representative can ease the disruption of income, and ensure management of the assets for the heirs.
Who should be my personal representative?
The personal representative should be familiar with the special needs of your family; but, a friend or relative may not be the best choice. Estate settlement is time consuming and complex, involving complicated legal procedures and tax rules. For these reasons, many people choose to name the bank as their personal representative.
What are some of the duties of the personal representative?
The personal representative:
- Locates and collects all property, accounts, and assets of the decedent
- Prepares an inventory of all assets and liabilities
- Obtains necessary appraisals and valuations of the assets
- Pays expenses, settles all claims, and legitimate debts of the decedent
- Prepares accountings for all beneficiaries, and the court, where necessary
- Coordinates the preparation of income and estate taxes
- Manages any assets, including an ongoing business, if needed
- Makes distribution of assets in accordance with the provisions of the Will
What are the advantages of naming the bank as personal representative?
The bank has experienced, knowledgeable, and professional staff to handle the settlement of your estate. The bank has a duty to be impartial to all beneficiaries, and provides safety, stability, and prudent management of your assets, moreover, the bank trust services are conducted in absolute compliance with the strict regulations of governmental agencies. When acting as trustee, the bank will provide all interested parties with accurate, complete accountings of all activity no less than quarterly.
Isn't joint tenancy ownership the best way to avoid probate?
Since jointly owned property with the right of survivorship passes immediately to the survivor, many people use this ownership method, especially on bank accounts and real estate. This type of ownership is not without pitfalls. Because title passes outright to the surviving joint owner, the terms of the Will are bypassed, often resulting in unintended consequences. For example, your planned distributions, and tax savings, may be sacrificed for the convenience of having a joint check signer. Caution is recommended when changing account, or asset ownership; a quick call to your attorney can avoid costly, or undesirable disruptions to your estate plan.
What is a self-directed IRA? How is it different from other IRAs?
The investments of all Individual Retirement Accounts (IRAs) are directed by the IRA holder. However, most IRA accounts offer specific options, such as CDs or mutual funds, while the bank trust department self-directed IRA allows the client to select assets from different sources and different investment classes. The self-directed IRA with the trust department can hold securities, real estate, notes and mortgages, partnerships and closely held stocks, subject to regulatory guidelines, in a single account.
Can I rollover my retirement distribution to the bank trust department?
The self-directed IRA with the trust department can accept rollover contributions as well as transfers from other IRAs. The trust department can accept either cash or assets as a rollover contribution or IRA transfer.