1 Solidifying the Investment Advisor Relationship Through Creative Trust Planning

2 Presented by: Matthew T. McClintock, JD WealthCounsel LLC (888) x 802

3 What to look for in Attorneys Collaborative Experienced Committed “Holistic” Inclusive Open-minded Creative Client-centered

4 The Value of the Advisor Relationship Topical expertise Contact/Communication Client-oriented perspective Client advocacy Continuity

5 Solidifying the Relationship During Client’s Life Consistent value add to attorneys and other advisors –Both client-specific and general –Providing / facilitating information –Co-presenting at events –Building referral relationships among advisors

6 Providing Continuity through Incapacity and Death Communication  Understanding Understanding  Guidance Guidance  Preservation Preservation  Enhanced Lives

7 Shaping the Level of Involvement Informal only Inclusion in attorney meetings Inclusion in client documents –Separate writings –Incorporated in legal documents

8 Memorializing the Advisor Relationship Separate Writings… Provide greatest flexibility Usually only “precatory” (non-enforceable) Designed to guide trustee/fiduciary to deal with client’s own financial advisor –Specifically named, or –“A financial advisor who is managing a significant portion of my estate, as determined by my Trustee (or Personal Representative).”

9 Memorializing the Advisor Relationship Separate Writings… Should be included with client’s estate planning documents Copies should be given: –To client, attorney, advisor, and CPA –As client ages, to named Trustee in client’s estate plan

10 Memorializing the Advisor Relationship Separate Writings… May lead to confusion, if different Should specify that one writing supersedes the other Generally non-binding on Trustee

11 Memorializing the Advisor Relationship Including in Estate Plan Documents… Provides greatest predictability Two general approaches: –Include provisions advising (or directing) the trustee to continue relationship with advisor –Establish formal “Investment Adviser” position in trust agreement

12 Memorializing the Advisor Relationship General Provisions Language in trust agreement guiding / directing Trustee to continue advisory relationship Takes effect when Client becomes incapacitated or dies

13 Memorializing the Advisor Relationship General Provisions Often incorporated in article guiding trust administration –(Provisions that assist the trustee in managing the trust) May also appear in Durable Power of Attorney (for consistency)

14 Memorializing the Advisor Relationship “Furcating” Trustee Authority: Maximum Involvement

15 Furcating Trustee Authority “Furcation”: Latin origin: “furca” – “to branch or fork” Estate Planning Context: Branching or forking discrete trustee authority to other power holders

16 Furcating Trustee Authority Origins in Asset Protection Context: –Separating general trustee duties from distribution authority  “Distribution Trustee” Broader Asset Protection Model: –Carving trustee role among multiple power holders

17 Furcating Trustee Authority Administrative Trustee “General” Trustee Distribution Trustee / Adviser Investment Trustee / Adviser

18 Furcating Trustee Authority Administrative Trustee –Diversifying responsibilities to establish / preserve legal nexus in desired jurisdiction –Maintains trust records, accounts, tax returns “General” Trustee –Manages regular trust operations

19 Furcating Trustee Authority Distribution Trustee / Adviser –Make / withhold distributions from the trust –Intended to be objective third party –Insulates trustee from pressure & liability associated with power to distribute

20 Furcating Trustee Authority Investment Trustee / Adviser –Oversees or directs trust investments A “Trustee” or an “Adviser” –Title holder, or power holder only?

21 Furcating Trustee Authority Investment Trustee / Adviser –May be granted specific powers to: Hold, maintain, or cancel life insurance Direct sale or exchange of property Open, manage, and close accounts

22 Implementation and Decision Making When does each option make the most sense?

23 Choosing the right approach Formal Investment Adviser designation Very strong client/advisor relationships; large estates; asset protection planning (domestic or offshore) Integrated Advisory provisions Mature client relationships; clients with modest to large estates and continuing trusts; Separate document Newer client relationships; smaller estates; younger clients with extended trust planning