The trustee's role is to manage the potentially adverse interest of beneficiaries while also adhering to trust administration rules and regulations
ATLANTA, June 5, 2014 /CNW/ - Atlantic Trust, the U.S. private wealth management division of CIBC (NYSE: CM) (TSX: CM), says that conflicts can arise from trusts that pay income to current beneficiaries while preserving principal for future beneficiaries. State laws can help balance these parties' interests.
"Too often, the trust agreement provides little guidance or fails to give trustees the discretion they need to serve both sides equitably," says Judith A. Saxe, managing director and senior wealth strategist for Atlantic Trust.
Lifetime beneficiaries generally want the largest possible payout, while future (remainder) beneficiaries prefer trust assets to increase in value. Trusts prescribing income payments often require trustees to invest to maximize income rather than optimizing trust assets by investing for total return. "Trustees can get caught in the middle of this delicate balance," says Saxe.
Trustees' primary responsibilities are making distributions and investing the assets. Legally, they must be impartial to both sets of beneficiaries when exercising these roles.
To assist with the issues presented by proper investment and appropriate distribution of trust assets, many states have adopted variations of two Uniform Laws: the Uniform Prudent Investor Act and the Uniform Principal and Income Act. Saxe says that applying these laws in the context of specific family situations is an important element of prudent trust administration.
In an ideal world, grantors would either outline their wishes precisely in regard to balancing the interests of current and remainder beneficiaries or give trustees enough discretion to invest trust assets equitably and make distributions, she says.
For more information about common trust administration questions, visit Atlantic Trust's Online Resource Center, or read "A Trustee's Delicate Balance: Family Legacy Planning in Difficult Times," at www.atlantictrust.com.
About Atlantic Trust
Atlantic Trust is one of the nation's leading private wealth management firms, offering integrated wealth management for high net worth individuals, families, foundations and endowments. The firm considers clients' financial, trust, estate planning and philanthropic needs in developing customized asset allocation and investment management solutions. Experienced professionals deliver a broad range of solutions, including proprietary investment offerings and a robust open architecture platform of traditional and alternative managers. Atlantic Trust operates in 12 full-service locations throughout the U.S. with $24.4 billion in assets under management (as of April 30, 2014). For more information, visit www.atlantictrust.com.
CIBC is a leading Canadian-based global financial institution. Through our Retail and Business Banking, Wealth Management and Wholesale Banking businesses, CIBC provides a full range of financial products to individual, small business, commercial, corporate and institutional clients in Canada and around the world.
CIBC Wealth Management provides relationship-based advisory services and an extensive suite of leading investment solutions to meet the needs of personal, institutional and high-net-worth clients through an extensive distribution network, that includes CIBC Private Wealth Management, CIBC Wood Gundy and CIBC Investor's Edge. Our asset management, retail brokerage and private wealth management businesses combine to create an integrated offer, delivered through nearly 1,500 advisors across Canada. In addition, CIBC Asset Management provides global money manager services to institutional and high-net-worth clients and industry-leading retail investment solutions through our two mutual fund familiesCIBC and Renaissanceand the CIBC family of managed portfolio solutions.
SOURCE: Atlantic Trust Private Wealth Management
For further information:
Media inquiries: Caroline Van Hasselt, Director, CIBC External Communications and Media Relations, (416) 784-6699, [email protected] or Carolyn Donnelly, Atlantic Trust Director of Marketing, (404) 881-3417, [email protected].