In addition to providing investment advice, the scope of Davidson Trust Company’s comprehensive wealth management for individual clients oftentimes includes estate planning services and a role as Trustee, Executor, or some other type of fiduciary.
Estate Planning
Our estate planning services are designed to help clients provide financial protection for their family members and assure the economical transfer of property at the time of death, and perhaps before. Within the framework of one’s intentions, both family and charitable, we seek to minimize the erosion of assets in the process. Arrangements are also considered for curtailing other expenses associated with estate settlement and continuing management. In consultation with a client’s attorney and other professional advisors, a plan is then developed that is oriented toward the financial and human needs of the family. Such a plan may include lifetime gifts, living trusts, and other transfers of ownership, as well as Will revisions.
The first step we take in the estate planning process is to determine the client’s objectives. We then draw up an inventory of all assets in which the client and family members have an interest, ascertaining how each asset is owned. We also consider which assets require special attention, now and later. Existing Wills and Trusts are reviewed, as well as life insurance policies, buy/sell agreements, employee pension plans and family agreements. Trusts in which family members have a present or future interest are also considered.
We then calculate the consequences (tax and otherwise) under the present plan. We work closely with the client’s team of advisors (including legal, tax, and insurance), to reduce the tax burden and to make whatever changes are desirable. Depending on the situation, some immediate actions may be called for, with immediate consequences. Other arrangements, including Will provisions, may be set in place for future implementation.
We stress to clients that a Will is an integral part of every estate plan. If one does not have a Will, State law will determine to whom and in what proportion his or her assets will be distributed upon death. A Will that is out of date can be just as problematic as having no will at all. Either situation usually proves costly and distressing to the family. Davidson Trust Company helps people to avoid this problem.
Trusteeship
As a trustee, Davidson Trust Company has two broad areas of responsibility: administration and investment. On the administrative side, in addition to faithfully carrying out the intentions of the creator of the trust, we seek to balance the needs of the income beneficiaries with the future interest of the remainderman (those who will ultimately receive the principal). When we are authorized to use trust assets for the benefit of a beneficiary, we exercise that discretion carefully and thoughtfully. Care and thought are also given to the investments of the trust. After speaking with the creator of the trust, the trustees, and the trust beneficiaries if appropriate, we rank the investment objectives of each trust on an individualized basis and implement an asset allocation consistent with these objectives.
Other elements of our extensive services as Trustee are:
- Continuing management of investments
- Interpretation and implementation of the provisions of the trust document up to final distribution of the assets
- Use of trust principal for a beneficiary, if permitted, in accordance with the terms of the trust documents
- Safekeeping and custody of securities
- Receipts of purchases and delivery of securities sold
- Income collection, crediting and remittance
- Periodic accounting: principal and income transactions, value, analysis of holdings
- Complete and accurate maintenance of tax cost basis information
- Preparation of trust Federal and State fiduciary income tax returns, including an annual summary of income tax information to be used for the beneficiary’s tax return preparation
Estate Settlement
Our administrative officers are experienced in every aspect of estate settlement and are particularly sensitive to the concerns of the beneficiaries. We begin our duties as Executor by meeting with the beneficiaries to describe the estate settlement process and the anticipated timetable. Part of this discussion includes a determination of immediate needs and income requirements. We then identify, assemble, value, protect, and manage the decedent’s various assets, including marketable securities, cash, personal tangible property, real estate, life insurance and business interests.
While there are many steps in the estate settlement process, we feel strongly about the need to evaluate and project the estate and income tax impact on the estate and for the family as a whole. A major part of this analysis includes determining what actions can be taken to minimize these taxes. Tax planning after death (often referred to as post-mortem planning) is a little recognized, but valuable service.
Other services we provide as an Executor in settling a client’s estate include the following:
- Prepare for the early distribution of income and principal, as permitted by the terms of the Will
- Investigate the decedent’s outstanding bills, taxes and other’s debts and pay those that are legitimate
- Determine which assets should be sold to make such payments
- Collect income and keep detailed records
- Prepare and file numerous documents, tax returns, including final Federal and State income tax returns and possible gift, inheritance State and fiduciary income tax returns
- Make final distribution of assets, including bequest of cash, securities, intangible property and real estate, as well as transfers to trustees of any trust established by the terms of the Will or during the decedent’s lifetime
- Prepare a complete accounting of the administration of the estate
- Inform beneficiaries, in writing, of their taxable and non-taxable income, and tax deductible expenses
- Represent the estate before the IRS in any investigations or audits
The estate settlement process can be a daunting affair for any family to manage effectively. Our professionals are experienced in these matters. This experience is invaluable when the goal is a timely and orderly estate settlement.
