It starts with trust and ends with a multitude of questions and qualifications. You would never delegate substantial wealth management to someone you do not trust, yet those family members you trust most may not have the experience needed to take over in the case of incapacity or death. That’s why corporate trustees exist, and also why they are held to fiduciary standards.

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Corporate trustees have professional training and technical skills. Our financial and auditing infrastructure are essential for the successful implementation of trust plans. Most importantly, we offer experience as trustee. Our experience doesn’t only stem from our handling of trusts across many years, it’s also forward facing as our team is constantly looking ahead to a changing tax and economic environment, and how that might affect our clients.

Trust officers, such as those at Arvest Wealth Management, have been fielding many questions from families about recent legislation and the potential for major tax increases, and whether anything might be done now to cushion the blow.

Key legislation under discussion includes:

For the 99.5%. The current $11.7 million per person exemption from the federal estate tax is already scheduled by law to fall roughly in half in 2026. Senator Bernie Sanders has introduced legislation to accelerate that change, bringing the exemption down to $3.5 million, boosting the starting tax rate from the current 40% to 45%, and imposing new restrictions on a wide range of legal estate planning strategies. The changes would go into effect next year, or upon the date of enactment.

That has some wondering whether they should make major gift transfers soon, so as to “lock in” today’s larger exemption.

American Family Plan. President Biden’s call for a dramatic increase in federal spending would be “paid for” with a restoration of the 39.6% tax rate at taxable income of $400,000 or more, capital gains would be taxed as ordinary income for those with taxable income more than $1 million, and basis step-up at death would be ended. Under current law, there is generally no income or capital gains tax on inherited assets, as their tax basis becomes fair market value on the date of the owner’s death. (Note that this rule does not apply to inherited tax-favored retirement accounts.) In a clarifying statement, the Biden administration reported that $1 million in basis step-up would be granted to each estate, so smaller estates would be excused from application of the new rule.

It is not yet clear if the end of basis step-up would mean a “carryover basis” for heirs, as already happens with the federal gift tax, or if death would be a realization event, requiring the estate to immediately pay tax on unrealized gains. Also uncertain at the moment is how this tax change would interact with the federal estate tax. So far, President Biden has not endorsed changes to the federal estate tax.

With the Congress closely divided, it is far from certain that any tax increases will be enacted this year.  Yet one of the jobs of our trust division is to stay abreast of tax developments and help our clients respond to them in a timely fashion.

Empowering someone to be your trustee is a great honor, but it’s not a job to be taken lightly. Most of the time if something goes wrong it’s not because of ill intentions, but rather a lack of experience or expertise.

When you partner with Arvest Trust & Wealth Management, you will choose how much you want to delegate. We could handle it all, or be a co-trustee just handling the paperwork and administrative side. Perhaps you want us to handle the investment management, but retain the administrative side as you communicate and adjust the plan internally based on changing family needs.

We can do more, or less, as you see fit, and by delegating to us you can enhance your trust with our ability to put your plan into action. Our key qualifications include:

  • Integrity. A trustee must live up to standards higher than those that prevail in everyday business.
  • Investment experience. A trustee may be called upon to consider the current income needs of a surviving spouse and the capital growth needs of two children who face heavy education expenses in years to come, and then to come up with an investment program that does justice to both requirements.
  • Administrative know-how. A trustee must make sure that trust assets are properly titled and safeguarded, collect income, and distribute or reinvest it as the terms of the trust direct, and perform any number of other chores.
  • People skills. The ability to serve as a trustworthy financial advisor, both to the individuals who create trusts and the beneficiaries that they name, may not be a formal requirement of trusteeship, but it’s important nonetheless.

We have a full staff and can step in anytime in the case of incapacity or worse. Most importantly, we may take a burden from loved ones at a time when they really need time to grieve. Employing our estate settlement services will provide for continuous family financial protection.

If you’re considering estate or trust planning, or how upcoming legislation might affect your estate, speaking with a trust officer, such as those at Arvest Trust & Wealth Management, would be worthwhile. Even if you decide on naming a family member as trustee, you’ll have more information and they can be ready for a backup plan if they need to add a co-trustee later.

 

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