Plan Your Success with PTC

Transcription

1 the Private Trust Company Plan Your Success with PTC Simplified Trust Solutions

2 Trust Opportunities to Explore LPL Financial and The Private Trust Company are committed to delivering administrative trust services in a seamless manner helping you maintain and strengthen your client relationships for generations. The Private Trust Company At LPL Financial we fully support the use of trust accounts for your clients through The Private Trust Company, N.A. (PTC), a wholly owned subsidiary and nationally chartered trust bank licensed in all 50 states. PTC is a valuable resource dedicated to serving you and your clients by delivering administrative trust services. Identifying Trust Opportunities Where do you find prospects with personal trusts? The best place to start is your own book of business. You may have clients with trusts that are currently managed by a bank and are dissatisfied with the quality of service or the performance of their account. For these clients it may be possible to transfer the trust to The Private Trust Company and have the assets held at LPL Financial and managed by you. New trusts can name PTC as trustee or a successor to the grantor as trustee. Revocable or Living Trusts Revocable or living trusts are the foundation of many clients estate plans. At LPL Financial, we are sensitive to the inherent problem of losing an account upon a client s death or incapacity. By naming The Private Trust Company as trustee or successor trustee, you will have a better chance of working with your client s beneficiaries and keeping the account for multiple generations. Irrevocable Trusts Irrevocable trusts are used for many specific asset protection and tax benefits and to handle assets after your client has passed away. Despite being irrevocable, The Private Trust Company can often take over trusts in which another bank or trust company is presently serving as trustee, thus increasing your assets under management. Charitable Remainder Trusts Charitable Remainder Trusts (CRT) are popular with clients having charitable intent. PTC s expertise in administering and accounting for such trusts makes it an attractive partner for you in bidding for new or successor CRT business. Charitable Lead Trusts A Charitable Lead Trust may provide income to a charity, a valuable inheritance and tax benefits to you and your client s heirs. Foundations A Foundation provides a structure for individual or family giving that can last many generations. The donor receives income and capital gains tax benefits for assets given to the foundation. The foundation pays no taxes on investment returns but must make minimum distributions (generally about five percent of assets) to charities each year. 2 Plan your success with PTC

3 The Private Trust Company Uncovering Trust Opportunities Existing Trust Opportunities For clients who are either currently receiving income from a trust or may be the beneficiary of a trust. Ask your clients if they are the beneficiary of a trust Ask your clients who the trustee is on the account Find out if your clients are satisfied with the service and performance they are receiving from their trustee/ trust company If your clients express concerns, introduce the idea of your involvement with the account Ask your clients for a copy of their trust documents and statement of assets, and complete the Confidential Client Questionnaire (the Confidential Client Questionnaire is located on the Resource Center Planning and Services Trust Services) Send PTC a copy of the trust documents, statement of assets and confidential client questionnaire for review and next steps Naming The Private Trust Company (PTC) as Successor Trustee For clients with a current trust who could benefit from PTC being named as successor trustee. Remind your clients that it s time to review their will or trust documents Introduce the idea of your continued involvement with their estate Explain that there are no current fees in naming PTC as successor trustee Provide their attorney with language naming PTC as successor trustee (located on the Resource Center Planning and Services Trust Services) Send PTC a copy of the trust documents before they are signed by the client Estate Planning Opportunities For clients who need to begin developing their estate plans. Ask your clients the following question, What would you like to have happen to your money when you pass away? Introduce the idea of your continued involvement with their family Ask your clients if they have an attorney and arrange a meeting in your office Explain the benefits of using The Private Trust Company Provide your client s attorney with the template trust language naming PTC (located on the Resource Center Planning and Services Trust Services) Charitable Trust Opportunities For clients with charitable intent and highly appreciated assets. Ask your clients if charitable giving is part of their estate plan Determine if they have any highly appreciated assets Discuss the benefits of a Charitable Remainder Trust Set up a meeting with their estate planning attorney Provide their attorney with language naming PTC as trustee (located on the Resource Center Planning and Services Trust Services) Contact the LPL Financial Planning group at (800) , ext For questions, please call the Trust Hotline at (800) , ext or at trust.services@lpl.com. Plan your success with PTC 3

4 Submitting New Trust Business To Transfer Existing Trusts from Other Institutions: Our goal is to provide you with the highest level of service. Therefore, before you initiate a new trust, we recommend you call one of the professionals at The Private Trust Company to discuss your case. You may reach us by simply dialing (800) , ext Complete the Confidential Client Questionnaire found on the BranchNet Resource Center Planning & Services Trust Planning Procedures and Guidelines Submitting Your Trusts to PTC. Submit the above referenced form along with a copy of the existing trust document and the most recent statement of assets to: The Private Trust Company, N.A Towne Centre Drive San Diego, CA For New Documents Naming PTC in a Current or Future Capacity: Provide your client s attorney with the PTC Trust Provisions found on the BranchNet Resource Center Planning & Services Trust Planning Procedures and Guidelines Trust Provisions and Drafting Memos and in the Template Trust Documents Section. Request this language be added to any document in which PTC will be named as Trustee, Successor Trustee or Guardian of Property. Submit a draft of the document along with a completed Confidential Client Information form to The Private Trust Company at the above address for review and approval prior to execution. If the trust is a new trust and will be funded immediately, please submit a statement of assets and/or description of property to be added to the trust. Next Steps in Naming PTC in a Current Capacity: Upon receipt of the above documentation, PTC will forward you an confirming receipt. PTC will complete the initial review and preparation for acceptance will begin. This process typically takes one to two weeks. The account will be presented to the Trust Administration Committee for approval. The Trust Officer assigned to the account will inform you of acceptance by . Within five business days of acceptance, the Trust Officer will forward all necessary paperwork to you for completion and signatures. Upon receipt of completed and signed new account paperwork by PTC, the Trust Officer will open the account and forward the Transfer Authorization form to move assets into the trust account. Upon receipt of assets by PTC, you may begin managing the trust investments. 4 Plan your success with PTC

5 The Private Trust Company Taking Existing Trusts from Banks If your clients receive income from an existing trust that is currently managed by the trust department of a bank or wirehouse, chances are they are not getting the same level of service or performance that they would receive from you. For these clients, it may be possible to transfer the trust to The Private Trust Company and have you manage the assets as the investment advisor. A case study of how an LPL Financial advisor grew assets under management by taking over the management of an existing client trust account: Client LPL Financial Advisor The client experiences trust officer turnover and unresponsive service Personal attention was replaced by 800# The client did not know the trust could be moved The client did not clearly understand the trust arrangement and how the assets were managed The LPL Financial advisor asked the client if they received income from a trust The advisor asked the client if they were satisfied with the service and investment quality PTC helped the advisor evaluate their options and strategize The current trustee was removed and PTC was named as trustee Trust assets moved to LPL Financial The LPL Financial advisor opened a $1.2M SAM II account Tips on Talking to Your Clients about Existing Trusts: Ask your clients Did your parents set up a trust for you? Ask your clients if they are satisfied with the level of service or return on investments of their trust account. Introduce the idea of your involvement with the account. Most clients do not know that as a beneficiary, they can usually remove the trustee and replace them with a different corporate trustee. Next Steps Ask your clients for a copy of the trust document and statement of assets. Send PTC copies of the trust and assets, along with the Confidential Client Questionnaire for review and next steps. Client Benefits following move to PTC The client received personal service from their trusted LPL Financial advisor Consolidation of client assets can improve consistency of portfolio management The trust assets were invested in non-proprietary vehicles LPL Financial Advisor Benefits The advisor strengthened his relationship with the client The advisor increased his assets under management The advisor was able to begin a relationship with other family members Trust accounts typically last longer 17 years on average Plan your success with PTC 5

6 Standards of Acceptability The Private Trust Company (PTC) accepts a new appointment as Trustee or Agent only after careful evaluation of the accounts and assets within the trust. A trust with unacceptable and/or generally acceptable assets may have to be restructured prior to PTC s acceptance of the account. In some cases, a trust may not be accepted by PTC and should remain with the current trustee, or utilize an individual or other trustee. In other cases, a trust may not be appropriate. The tables below are designed to help you evaluate your clients accounts and assets, and address any potential issues prior to submitting a trust. PTC s acceptance of new trust accounts is based on an individual evaluation of the accounts and assets used to fund the trust. PTC does not provide legal advice. All legal issues should be referred to your client s attorney. Account Evaluation* Acceptable Accounts Generally Acceptable Accounts Unacceptable Accounts Personal Trusts: such as revocable, irrevocable and agent/custodian accounts Charitable Lead and Remainder Trusts Newly Formed Irrevocable Life Insurance Trusts (ILITs) incorporating PTC provisions with A or B graded policies** Asset Evaluation Foundations subject to additional tax preparation fees 2 Rabbi Trusts Stretch IRA Trusts subject to additional fees Trust Settlements subject to additional fees Existing ILITs with A or B graded trust agreements and policies** Employee Benefit Plans or other ERISA Qualified Plans Estate Settlements Offshore Trusts Private Annuity Trusts or Deferred Sales Trusts Acceptable Assets Generally Acceptable Assets Unacceptable Assets Closed-End Mutual Funds or Other Publicly Traded Partnerships or REITs 3 Marketable Securities 3 Mutual Funds (except C shares) Alternative Investments and Other Assets Approved by LPL Financial Research must meet LPL Financial acceptability and concentration restrictions Annuities acceptable by LPL Financial (VAET required) but no CDSC, lump sum death benefits 3 New Life Insurance Policies must be A or B graded by PTC Residential Real Estate beneficiary occupied, and under the control of an appointed responsible party, and under 50% of account value Non-Voting Closely Held Corporate Shares Collared Option Strategies (covered calls/ writing puts) Concentrations (with diversification sale plan in place) 3 FLP and Other LP Units Income Producing Real Estate must be under the control of an appointed Responsible Party, in an account over $3 Million, adequately insured, and under 50% of account value 2 LLC Non-Managing Member Interests Hedge and Exchange Funds are subject to LPL Financial limitations on all alternative investments Non-Marketable Assets Non-Marketable Promissory Notes Personal Property generally acceptable if: the property is to be sold or distributed immediately; and the sale or distribution is completed by a non-ptc third-party; and the property is under 25% of account value 2 Private Placements, Private REITS must be pre-approved by LPL Financial Existing Life Insurance Policies must be A or B graded by PTC** Accounts with a Line of Credit, Debt or Margin Annuities Deemed Unacceptable by LPL Financial Any Other Asset Deemed Unacceptable by LPL Financial Derivatives other than covered calls or collared option strategies Environmentally Hazardous Assets Income Producing Real Estate if not under the control of an appointed Responsible Party, or account size under $3 Million, inadequate insurance, or over 50% of account value Insurance Products Other Than Life Insurance or Annuities LLC Managing Member Interests General Partner Interests Residential Real Estate if over 50% of account value, or not occupied by a beneficiary, or not under the control of a Responsible Party Sole Proprietorships Voting Closely Held Corporate Shares Liabilities or Debt Mutual Fund C Shares * PTC reserves the right in its sole discretion to amend the table and/or any standard stated herein at any time, without notice. For information on fees, please see The Private Trust Company, N.A., Fee Schedule. ** Per PTC standards and judgment. 1 Non-marketable assets to be managed by non-ptc third-party. 2 Certain assets or activities (including, but not limited to, bill-paying, complex tax work, forensic accounting, trust consulting, valuations) are subject to extraordinary service fees or delegated to third-party agents for a fee. 3 See concentration standards on page 7. 6 Plan your success with PTC

7 The Private Trust Company Concentration Thresholds and Diversification Requirements Generally, it is the duty of The Private Trust Company, N.A. (PTC) and the LPL Financial Advisor as the Trust s investment advisors to diversify the investments of a trust account. When analyzing diversification, PTC considers all of the client s accounts, including original and newly purchased investments. It is the policy of The Private Trust Company to adopt a sound program of diversification of concentrations greater than the guidelines listed below. These guidelines apply for account acceptance and administration. In general, The Private Trust Company will permit trusts to be invested 100% in a single life insurance policy if that is how the estate and insurance plan is designed for the grantor and beneficiaries of the trust. Concentration Guidelines A maximum of 15% for an individual asset of any type, other than beneficiary-occupied residential real estate. No more than 50% of a trust in beneficiary-occupied residential real estate. (Can be multiple parcels of real estate.) Only for trusts over $3 million, no more than 50% in income producing real estate under control of an appointed responsible party. A maximum of 40% for any one mutual fund (with no restriction on a concentration in one family of mutual funds; and allowing 100% of a trust in an appropriate mixture of mutual funds). No more than 20% of a trust in alternative assets, following LPL Financial guidelines on the selection and inclusion of alternative assets. No more than 50% of a trust in an annuity or annuities, all from highly rated carriers. No more than 25% of a trust in personal property. Exceptions In implementing any exceptions to this policy, The Private Trust Company will consider extraordinary circumstances, the direction of a trustee, special trustee, trust advisor, investment advisor or other party legally responsible for the investment management of the account and the following criteria, all as approved by the Trust Investment Committee: Terms of the governing instrument Ability to obtain a fair price on the sale of the assets Availability of appropriate alternative investment choices Purpose of the trust Tax consequences Size of the account For more information, please call the Trust Hotline at (800) , ext or contact us via at trust. services@lpl.com Plan your success with PTC 7

8 Member FINRA/SIPC For broker/dealer use only. Not for distribution to the public. PTC