State chartered trust companies offer supportive, localized trust solutions, yet face operational impediments when asked to serve outside their home state borders. When sourcing a trust partner, why not reach for the best of both worlds – a trust partner offering nationwide trust coverage plus a progressive state trust charter?
Family offices, estate planning professionals and trusted advisors take great pains to provide sound advice to their clients regarding trust situs. After all, the decisions based on this advice are central to their clients’ long-term financial plans and will significantly impact future generations.
Consultative advice in this regard can be a tricky balancing act if limited to a state chartered trust company. National Advisors, with its national and South Dakota charters, may be the only company enabled to walk the entire tightrope from end to end. But before you ponder the wide-ranging benefits of both a national and state charter, let’s start with the basics.
The benefit: flexibility and options
As in the real estate business, delivering advice and trust services to your clients is a matter of location, location, location. The jurisdictional home of the trust, its trustee, participants, and assets will determine the fine points of administration, asset protection, duration, privacy, stakeholder influence and tax treatment, both income and estate.
Some states, commonly referred to as progressive trust jurisdictions, have proactively sought to incentivize the aggregation of trust assets within their borders. They achieve this through myriad legislative and regulatory pronouncements as they work with the trust industry to craft their particular jurisdictional utopia. South Dakota is one such progressive state, consistently ranked as the top trust jurisdiction in the country.
If most favored jurisdiction were the only driver of advisor advice, one could envision lines of clients at the borders of states like South Dakota waiting to work with a state domiciled trust company. But just as one size of wealth management plan does not fit all, even a progressive state may not be the perfect fit for all your clients.
Wealthy families often lead complex and multi-state lifestyles. Such complexity is exacerbated when you consider the generational interdependence of family wealth. State chartered trust companies, while potentially meeting a client’s present needs, simply possess too many constraints to meet the long-term and generational wealth management sophistication your clients demand. In response to this reality, a staggering amount of trust assets every year land with nationally chartered trust companies empowered to operate on every inch of U.S. soil.
Companies offering a dual trust charter can give you the best of both worlds. The national charter covers all advisors and their domestic clients across all 50 states, and the South Dakota charter provides the depth of a top-tier state with progressive trust statutes.
Caution: Avoid a predatory trust partner
Most national charters are maintained by large financial institutions, such as a bank or wealth management complex with no corporate culture of independence. Such institutions have a well-earned reputation for using their trustee role to prospect accounts away from the advisors who built them. They possess deeply rooted cross-selling DNA, driven to seek profit from wealth management services at the expense of the independent advisors who established, cultivated and flourished the client relationship. Likewise, family office practices are not immune to these institutions’ insatiable desire for asset aggregation and relationship control.
For independent advisors, introducing your best clients to such an institution is akin to letting the fox in the henhouse, yet restricting your best clients to a state chartered trust company may be inappropriately limiting. Fortunately, your consultative advice respecting a trust partner is not limited to the binary choice of national vs. state charter.
The best of both worlds
National Advisors maintains both a national trust charter and a progressive state trust charter to provide its trusted advisor partners the best of both worlds. Our national charter allows us to deliver trust services across all 50 states, while our South Dakota charter provides your clients access to the country’s premier progressive jurisdiction.
National Advisors was formed by independent advisors with a simple goal in mind – to provide best in class, nationwide trust administration in a fiercely independent and non-competing environment. National Advisors Trust Company, FSB pursues this goal every day, serving advisors in 45 states and trusts across the nation.
Over time, our advisors increasingly requested the ability to provide their clients access to progressive state jurisdictions with uniquely advantageous trust laws. As a trusted advisor-centric organization, we responded to these requests by forming and capitalizing National Advisors Trust of South Dakota, Inc. some three years ago.
National Advisors Trust Company, FSB and National Advisors Trust Company of South Dakota, Inc. represent the coalescence of our founding vision – world class, nationwide, independent, and non-competing trust administration.
When requiring seamless, multi-jurisdictional delivery of trustee services, our trusted advisor partners select National Advisors Trust Company, FSB as their clients’ trustee of choice. When requiring progressive jurisdictional advantages (e.g., administration, asset protection, duration, privacy, stakeholder influence and tax treatment), our trusted advisor partners select National Advisors Trust of South Dakota, Inc. as their clients’ trustee of choice. Our nationwide reach and progressive state touch have made National Advisors the “best of both worlds” solution for our trusted advisor partners.
This is an ideal model and not many offer it in an independent environment. Think national when it fits; act local when it’s useful: the dual chartered model may just be the future of the industry.
