Trustee Advisory Services

Today, being named a trustee carries a high degree of responsibility and substantial liability.  Are you, as a trustee, knowledgeable about the modifications to the Principal and Income Act, effective in 2002? Are you in compliance with the New York Prudent Investor Act? On January 1, 1995, the Prudent Investor Rule replaced the Prudent Person Rule in New York. While the new act broadens the investment options available to trusts, it imposes additional duties on a trustee. The law requires a standard of conduct and not one of performance. Among other things, the law now requires a trustee to: Consider the size of the portfolio, the nature and duration of the trust, the distribution requirements, the general economic conditions, the effect of inflation or deflation, and the expected total return of the portfolio. Consider the needs of the beneficiaries for present and future distributions, within the parameters of the trust provisions. Diversify assets unless a trustee reasonably determines that there is a valid reason not to diversify. Determine at the outset of the trust whether or not to retain or dispose of the initial trust assets. Assemble information, to the extent possible, on all beneficiaries of the trust, including, but not limited to, other income and resources available to the beneficiaries. Determine the value, if any, of any particular asset to some or all of the beneficiaries. Obtain information necessary to determine the tax consequences of investment decisions and distributions. Determine the risk and return objectives, which are reasonably suited to the entire portfolio. Develop appropriate overall investment strategy for the entire portfolio, which will generally include appropriate diversification. Periodically update and document information provided by the beneficiaries.  Maintain current records by documenting all activities and decisions with respect to the trust.   In addition, the law now encourages a trustee to hire professional investment management. HCB works closely with the trustee’s advisers, including attorneys and tax advisers. And, to assist both new and experienced trustees with a disciplined approach to trust management, HCB provides the following services: Clarify the “statement of trust purpose.” Analyze the assets of the trust. Assist in understanding the needs of all beneficiar- ies, including remaindermen. This includes a beneficiary data sheet, and risk tolerance analysis. Develop an investment policy statement for the trust, consistent with the statement of trust purpose and the needs of the beneficiaries. This gives clear direction to the trustees. Recommend proper asset allocation, based on the investment policy statement. Provide a structure to document your communications with beneficiaries and advisers, as well as your activities as a trustee. Help develop a tax-efficient investment strategy. Maintain personal communication with the trustee on a predetermined schedule. Offer the option of monthly statements which include a list of all the holdings in the portfolio, cost basis, and all transactions that took place during the month.  Provide gain and loss reports and tax information statements. Prepare special reports upon request. Offer several options for remitting income, withdrawals, and/or payments of taxes.

Founded in 1932, HCB is an investment services and financial planning firm, with clients in approximately 40 states. It is one of the area’s largest independently owned firms. HCB’s clients include trusts, charitable organizations, individuals, and pension plans. HCB has a long history of providing professional portfolio management to trusts. The senior portfolio managers’ average industry experience is 29 years. And HCB currently has seven CFP® professionals on staff. The firm’s research department is in-house, which allows us to offer independent, objective research. And our staff presently includes three Chartered Financial Analysts®. Our analysts present specific investment recommendations at a weekly investment committee meeting. Six senior portfolio managers, all with more than 20 years’ experience, evaluate and give final approval on these recommendations. As a result, before any buy or sell recommendations are used in client accounts, they are vigorously examined and debated. And, because HCB is not an investment banker or a market maker, we have no potential conflicts of interest. The firm’s Fiduciary Focus On Trusts service is headed by Peter Grogan, CFP® professional. He is a senior vice president and an owner of the firm, and has extensive knowledge of trust and tax issues. He works closely with area attorneys and accountants, and runs a monthly case study group where area professionals meet to discuss complex financial planning topics, including trust issues.