Want to set up a trust? Here are some tips, tricks, and ideas from our friends at Lake Elmo Bank:
Apex: First off, what has been your path to this career? How does one end up in trust administration?
Rita: My previous employer was Wells Fargo, where I held a variety of jobs in the stock transfer department over 20 years. I met the owner of Lake Elmo Bank, she told me there was an opening in the trust department, and I never looked back. The department has grown a lot! I love how close our team is, the close relationships with many of our customers, and the variety of work we do.
Katie: I was a teller at Lake Elmo Bank in high school and college, and then had an opportunity to come back. The bank has invested in some education for me–”trust school”–and I worked my way up through the department since I started in 2012. There’s low turnover, and service is a key value here. We sometimes meet with a family three or more times before a trust is signed, so we really get to know the people behind the document.
Apex: First, a bit of an explanation. We’ve had professionals compare a trust to a shipping box. It’s an entity that is legally set up, but can be funded at any time in the future–during the owner’s life or after they’re gone. So the “box” remains empty until it gets funded with assets and then dispersed (“sent”) to beneficiaries/recipients, all according to the parameters set up in the trust documents. The trust can be part of, or referenced in, an overarching will or legacy plan, and it’s held by a foundation or trust company and managed by a trustee. The trustee can be a family member, friend, or professional; we wrote an entire guide about this role recently, because we get a lot of questions! But choosing the right company or firm to administer a trust is just as important. What should families look for or ask?
Katie: I always go back to the personal service, because trusts are so unique and personal to the family. Especially at the beginning of trust administration, we’re really getting to know the family and the beneficiaries of the trust. It’s good if families can directly call the lead on the account, and get to know the officers, in case questions come up. We’re doing everything right, from a regulatory standpoint! Sometimes there can be great peace of mind from selecting a community bank over another entity.
Rita: I agree. Low turnover, and consistency, are key. Trusts are often set up to last decades, so we really get to know these families over the long haul. Sometimes, we’re cleaning out or selling homes, assets, and vehicles. It’s not uncommon to meet with families a lot.
We can also act as “co-trustee” on a trust, working jointly with a trustee or family member to manage a trust. We can be a secondary trustee, taking over where an original family or friend trustee was serving: handling taxes, bills, or managing home after the original person has passed away or can no longer service. Or we can act as a full, professional trustee from the get-go. But even in that case, a child or family will know the decedent’s goals and motivations, so consultation is important. We can create a really nice, complementary relationship that ensures someone’s wishes are honored, but also that everything is tidy with the IRS rules, policies, etc.
Apex: So I’m hearing that flexibility, service, and knowledge are important to find in a trust company…they need to be able to understand the family’s needs and wishes and step in respectfully and seamlessly, even when things are complicated. What’s the most interesting thing you’ve had to take care of for a family?
Rita: We’ve handled really valuable collections. Jewelry, guns, things that have a niche market and have to be properly appraised and sold. I had one family tell me, “You can sell the house only after the dog dies. That dog has been by my side my entire life!”
Katie: The mix of assets can be really different depending on the family!
Apex: Fair enough! What do you look for when a family is wanting to set up a trust? Is there anything that rules them out from being able to work with you?
Katie: We prefer there to be liquidity in the estate. We were recently asked to be trustees on a “disclaimer trust,” where only the home was placed in the trust. We worked with the attorney and beneficiary to find a solution to the liquidity concern and came up with a plan that worked for all involved.
“More and more families are seeing the importance of legacy planning and understanding what a trust can do for their family. Even if they don’t have millions, it’s a nice way to provide for kids and still retain some control over their assets.”
Rita: There aren’t too many trusts we can’t work with. I’ll just reiterate the ease of naming a corporate trustee in an estate plan. If you, as an individual, are appointed trustee and do something wrong, you’re liable! So, it’s always good to have someone who knows the trust process and can have your back.
Apex: What things are helpful for a person or couple to think about before they come to you wanting to set up a trust? We often talk with families about what life events, ages, or expenses could trigger a disbursement to their child(ren) or heirs, but what are some parameters or best practices that people can keep in mind as they’re thinking through the day-to-day uses of a trust?
Katie: We often suggest families consider adding a co-trustee. In a community bank like ours, that can create a nice relationship. We meet with prospective families all the time, and often they’re thinking they’ll just name a child or friend as the sole trustee. After they learn about what that actually entails, they change their plans! In a co-trustee situation, an heir or other representative can remain helpful and in-control, without the burden of the entire fiduciary responsibility.
We refer people to attorneys to help them make a plan if they don’t have one yet. Call people, ask questions, and shop around to be sure you’re getting the best price, and to ensure a good fit for what you need. This is a big decision.
Rita: We also encourage some families to consider charitable trusts–if they’re interested in eliminating tax by giving significantly to nonprofit organizations or causes–or special/supplemental needs trusts if one or more heir(s) have unique circumstances.
It’s just important for families to consider all their options and select the product(s) that makes the most sense for them. If there’s ever a gray area, it’s a good idea to have a trust attorney to run things by. We work closely with attorneys, and can refer our clients to trusted ones in the area. Making sure things are done right, and that the trust will actually act the way you intend, is worth any legal fees you might pay.
Apex: What do you wish more families knew/did when it came to estate planning?
Rita: We’ve seen people miss opportunities. Sometimes they don’t understand how things flow or how the estate settlement process works. Ask a lot of questions!
Katie: It’s also really important to follow through with the plan as it’s written. Be careful that your assets are titled correctly, so that they can flow seamlessly into a trust.
Apex: What trends are you seeing? Are you seeing things being done differently than they were years ago?
Katie: We’re not involved in the planning as much, but we do get to see the end product that families have come up with. We’re working on trusts that were established 20 or more years ago! But I think COVID highlighted our business. I think that might be a dark thing to say, but people lost loved ones who didn’t have plans in place. And in general, our population is aging. Estate planning attorneys are so busy these days. But we’re happy to have those preliminary, fact-finding meetings with families to help them think through all the details before they sign anything. And there’s no fee to name us in a document; we don’t start charging an administrative fee until we’re actually hands-on working with the trust.
Rita: We host an annual seminar on trusts, and it has been well-attended! Attorneys share all sorts of stories. Trusts are becoming increasingly popular because of their flexibility and privacy. But it’s so important to think through the details. There are great professionals and resources out there! Seek them out.
About our Guest Contributors
Katie Bang, CTFA
Vice President – Trust & Estate Services
Katie is a graduate of the College of St. Benedict where she studied Business Administration. She joined Lake Elmo Bank in 2005, and has worked in the trust department since 2012. She attended the Cannon Financial Institute Trust School.
Rita Shepard, CTFA
Assistant Vice President - Trust Operations
Rita joined Lake Elmo Bank in 2007, bringing more than 20 years of experience in the securities and banking industry. Rita attended the Southeastern Trust School at Campbell University and the Cannon Financial Institute Trust School.
Apex Legacy Consultants offer consulting packages and legacy planning support for people at every age and stage of life, and with any kind of estate–no matter how eclectic! We’d love to walk with you as you create a plan that fits your unique family, situation, and philanthropic goals.
Co-Owner and CMO
Monique has spent 15 years in the nonprofit sector, handling marketing and communications at a megachurch and a university. She’s a wordsmith, and also a seasoned entrepreneur and creative who thinks “outside the box” about where Apex could go next.