Custodian Neutral Trusteed IRA

Be active with Client’s estate planning

An astonishing 98% of people who inherit money yank it from their parents’ financial advisors. Why the industry, and the families, should find a better way.” So writes Michael Sisk for Barron’s article in 2011 titled, “How to Keep the Kids”.

While Custodian Neutral Trusteed IRA s and Trusteed IRAs are treated identically for tax purposes, the Trusteed IRA gives you control of your IRA assets while in a typical Custodial IRA, your named beneficiary takes control of your IRA assets upon your death and can withdraw them at will.

Every advisor hopes to earn the trust of their clients to continue working with them over decades.  As Sallie Krawcheck, former President of Global Wealth and Investment Management at Bank of America has stated that over 50% of wealthy US clients would welcome the chance for advisors to discuss how to continue working with the next generation.  Advisors generally do not discuss this with clients.

Not discussing these issues will negatively affect advisors.  According to the article, 45% of surviving wives do not keep the advisors used by their deceased husbands, also the article states that 98% of children polled stated they would replace their parent’s advisor.

There is a simple solution.  During quarterly or annual meetings with clients review their estate planning documents.  Discuss wealth migration issues.  Look at the section where it states who are the initial and successor trustees.  If they are individuals, work with your clients to build a relationship with those future individual trustees.  If it is a corporate trustee, such as Bank of America or a trustee that manages trust assets, discuss with your clients that you will be fired when they pass away.

You have already worked hard on wealth migration strategies and intergenerational financial planning and so this is a natural continuation of the work you are already doing. It is not difficult to change a trustee.  We are a leading trust company based in South Dakota.