Trusts originated in the middle ages when English noblemen went off to fight in the Crusades and left their possessions in the hands of “trustees” who were usually friends or senior officials of the church. Today, bank trust departments manage many different types of assets such as real estate, businesses, and marketable securities for individuals, families and organizations.
Trusts are legal entities that own the assets placed in the trusts but trust departments can also manage assets that are not held in a trust. Trust departments have a high level of fiduciary responsibility and therefore manage assets in a prudent manner in accordance with the established plan.
Basic estate planning involves deciding how assets will be managed and distributed in the event an individual is incapacitated or upon that person’s death. For some, a simple will, power of attorney and a living will or medical power of attorney are all that is necessary to manage assets. For others, various types of trusts are also utilized to carry out an estate plan and meet financials goals. A few examples of commonly used trusts are spend thrift trusts which are used to establish restrictions on how heirs can access their inheritance, trusts for minors, and trusts for the benefit of a surviving second spouse with remainder interests vesting with children from the first marriage.
A financial and estate plan needs to fit a person’s unique circumstances. In order to determine the appropriate plan, an advisor conducts an in-depth interview to identify goals, objectives and risk tolerances. A typical trust officer would be able to provide both financial planning and estate planning services. Other professionals such as financial advisors and estate attorneys also offer these services but a bank trust officer is proficient in both areas.
If your bank has a trust department, ask to speak with a trust officer about establishing an estate and financial plan. If you are already working with a financial advisor, ask him or her about creating an estate plan or ask that they refer you to a local estate planning professional. If your bank does not have a trust department or you are not currently working with a financial advisor, ask your banker to recommend a local estate planning and financial professional with whom you could meet.
Charles (C. J.) Carter, CFA, is Assistant Vice President/Portfolio Manager at First Bank and Trust Company.
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First Bank & Trust Company, one of the top community banks in the United States, is a diversified financial services firm with office locations in southwest Virginia – serving Blacksburg, Christiansburg and surrounding areas – northeast Tennessee, and the New River Valley and Shenandoah Valley of Virginia. Financial objectives are addressed by offering free checking products for personal and business accounts, and assessing lending solutions managed by mortgage, agricultural and commercial lending divisions. Comprehensive financial solutions are available through trust and brokerage service representatives. For businesses, First Bank & Trust specializes in business services, including online banking and online billpay, and business loans.