Increased Complexity—and Importance—of Estate Planning


As your clients age and their net worth increases, their estates may also become more complex. Issues like blended families, digital assets, changing tax laws, and concerns about long-term care become more significant. Many do not have any children willing or able to play an active role in administering their trust and/or estate if the individual becomes incapacitated or when they pass away. For the most complex clients, like those with interests in closely held businesses or other unique assets, the need for tailored solutions becomes most pronounced.

Finding Ideal Partners


How do you maintain and protect your client relationships, knowing that your clients need fiduciary protection while also recognizing that many corporate/professional trustees try to bundle fiduciary services and investments, in their effort to capture the entire relationship?

The Michigan Trust Code provides opportunities for an advisor to maintain an ongoing role as assets transfer from one generation to the next. And certain providers offer solutions that empower individuals to make the right choice for the families when it comes to selecting the ideal fiduciaries for particular tasks.

What Options Exist?


1. Delegated Trust. In this scenario, the trustee delegates a duty that they hold under the trust. With a delegated trust, you can stay in charge of the investments while a professional trustee (like CU Trust) holds fiduciary responsibility.

This was the most common way trusts used separate investment managers prior to the signing of the Michigan Uniform Directed Trustee Act in 2018 and is likely to retain its popularity for advisors to consolidate clients’ assets with trusts currently managed/administered by trust departments/banks (like CU Trust) who are amenable to this shared arrangement.

It requires clear documentation, establishing expectations around client communication, and relationship management. Some require custody on their platform, others offer a shadow accounting alternative.

2. There are additional opportunities available, including directed trusts and divided trusts. While these allow involvement of more parties, they have corresponding complexities and liabilities.

• Directed Trusts: An individual or entity (with trust powers) is named as a director who is separate and distinct from the trustee(s) with powers to direct certain duties. This approach increases flexibility while allowing for an investment advisor to direct investments. Downsides to this approach are the potential for confusion in duties and ambiguity as to where duties might overlap.
• Divided Trusts: Separate trustees are named over some or all of the following: investments, distributions, and administration. This is the most “clean line” approach, allowing for separate trustees for distributions, investments, and other administrative duties. However, it is likely a fit only for high-to-ultra high net worth clients, as costs for each separate trustee can become burdensome to the trust.

How Does this Help your Business?


This keeps you connected to the family/beneficiaries, allowing you to focus on retaining and growing your business, while the trustee is responsible for the advisor’s actions, paperwork, and more.

Tell us more. 

Share any questions that you have regarding how this might affect your business. And let us know what factors are influencing or impeding legacy planning. We will share more information in a follow-up article based on your input.