America’s Most Advisor-Friendly Trust Companies Showcase - Flipbook - Page 9
2026 AMERICA’S MOST ADVISOR-FRIENDLY TRUST COMPANIES
in that direction or they simply don’t
need them yet.
They will. Younger clients will become
old ones sooner or later. They’ll want to
make sure their advisors can work with
the assets they’ve accumulated over
their lifetimes.
You might not be around to see that
happen. But your successors will. Give
it time.
TRUSTS AND THE ADVISOR
Trusts play a critical role in financial
and estate planning, serving as one
of the most versatile tools available
to wealth managers. At its core, a
trust is a legal arrangement in which
one party holds title to an asset and
manages it for the benefit of another.
While primarily used in estate and
financial planning, trusts also have
applications in business, including
employee benefit plans, debtorcreditor relationships, and structured
financing. Their utility extends beyond
simple wealth transfer, offering asset
protection, investment management,
and tax planning benefits.
However, not all trusts are created for
legitimate purposes. Some have been
exploited by unscrupulous promoters
and have been included in the Internal
Revenue Service (IRS) “Dirty Dozen” list
of tax scams. This makes it imperative
for financial planners to ensure that
every trust structure has a clear, lawful
purpose and aligns with the client’s
long-term financial goals.
Trusts are unique in their ability to
extend financial control beyond
the settlor’s lifetime. They bridge
the gap between life and death,
allowing wealth to be managed,
protected, and distributed according
to predetermined terms. In some
jurisdictions, trusts can last
indefinitely, while in others, they are
subject to rules against perpetuities,
which typically limit their duration to
90 years or the lifetime of specified
individuals plus 21 years. A growing
number of states have repealed
or extended these limits, making
perpetual trusts a reality in some
locations.
THE CLIENT PERSPECTIVE
Clients establish trusts for many
reasons beyond tax efficiency. A trust
can provide investment management,
act as a safeguard in the event of
incapacity, and ensure continuity in
asset administration. Some clients
create trusts as a contingency plan
for business ventures, ensuring a
source of income if their enterprise
faces difficulties. Others use trusts to
bypass complex probate proceedings,
ensuring assets are transferred
efficiently and privately.
The COVID-19 pandemic highlighted
concerns about the unexpected loss
of financial control due to health crises,
making standby trusts an increasingly
attractive option. Privacy is another
significant consideration. Unlike wills,
which become public record upon
probate, trusts allow for confidential
asset distribution.
Many clients establish trusts for the
benefit of family members, particularly
spouses, children, or grandchildren.
Trusts can support minor children,
individuals with disabilities, or even
financially responsible adults who may
benefit from structured asset protection.
Trusts help shield assets from creditors,
limit exposure in matrimonial disputes,
and prevent unnecessary depletion of
wealth through mismanagement.
Although trusts offer considerable
advantages, tax implications must be
9
Estate Planning
Checklist
7 Musts Before Meeting with an Estate
Planning Lawyer
Create an Inventory
Identify Your Beneficiaries
Does Someone Need a
Guardianship?
Gather Essential Documentation
Choose an Executor
What If You Become Ill or
Incapacitated?
Generational Wealth
Management
carefully managed. The benefits of
estate and gift tax savings must be
weighed against the cost of income
taxation on trust assets. Trust tax
brackets are highly compressed,
meaning that accumulated income
can be taxed at the highest marginal
rate much sooner than is the case for
individual income.
Capital gains and qualified dividends
are adjusted annually for inflation,
but the thresholds and marginal
rates remain significantly lower than
those for individuals. As a result,
distributing income to beneficiaries
in lower tax brackets can provide
meaningful tax efficiencies.
Understanding these tax dynamics
is critical in trust planning. In many
cases, distributing income strategically
can lower the overall tax burden and
maximize wealth preservation for
future generations.
