Wealth Management & Trust Services FAQs

What is a Trust?

A valid Trust instrument must identify the following:
1. Grantor/Settlor – the person creating the Trust.
2. Trustee – the person or entity that administers the Trust.
3. Trust Property – generally cash, real estate, and/or investments, but may include some other types of tangible personal property, contractual rights, etc.
4. Beneficiary – the person(s) or entities who are entitled to receive the beneficial interest from the Trust owned assets at some time during the Trust’s existence.

A significant benefit of a Trust is the avoidance of probate upon the Grantor’s death. Probate can be a long, costly, and public process that must be undertaken when someone passes away with any assets that are owned in their sole name, and which do not otherwise name a beneficiary. Trusts are an ideal way to avoid this scenario and to have assets be professionally managed over generations and distributed according to the grantor’s intentions.
There are many types of Trusts, and they can be designed to serve the wishes of the Grantor. For example, a Trust can be designed to remove assets from an estate, reduce taxes, protect assets from creditors, carry out charitable wishes, provide income and asset management for children or disabled individuals, and to provide income to beneficiaries across multiple generations. They also help to ensure privacy and confidentiality, which is lacking in public probate.

While it is simple to create a joint ownership for checking, savings, and investment accounts, many people feel uncomfortable sharing information and control over their assets while they are still able to manage the assets on their own. Joint ownership can also subject your funds to creditors’ claims of your additional owner. Another option would be a payable-on-death (POD) or a transfer–on-death (TOD) account to transfer title upon death to beneficiaries without the necessity for probate. It can be confusing to keep track of the various accounts, where they are, and monitor what beneficiary designation that you have placed on each account. If you wish to provide equal amounts to multiple beneficiaries, this can defeat your purpose. Having one Trust that consolidates everything into a single convenient location, where you may designate multiple beneficiaries, makes the entire process easier and more organized.

A legally binding Trust document should be created by your estate planning attorney. Once the Trust is created and properly executed by all parties, the Grantor can then “fund” the Trust by retitling some or all of their assets or establishing new accounts to receive those assets intended for Trust ownership. The Trust funds can thereafter be managed by the Trustee (often the Grantor is also serving as the initial Trustee). The Trust assets may include a variety of investments designed to meet the terms of the Trust and the needs of the beneficiaries. The Trustee will establish an investment objective, and determine an appropriate asset allocation (balanced, conservative, aggressive, etc.) with the Trust’s distribution schedule and the proper risk tolerance in mind.

The primary difference is that the terms of a Revocable can be changed at any time during the lifetime of the Grantor, but the terms of an Irrevocable Trust are generally locked in for the duration of the Trust. In a revocable Trust, the Grantor(s) generally serve as the initial Trustee and Beneficiary, allowing them to retain control over all the assets until they become incapacitated or pass away.
Both Revocable and Irrevocable Trusts will generally avoid probate involvement for all assets owned by the Trust. Assets that are NOT titled in the name of the Trust will still need to pass through probate (unless joint, Payable on Death or Transfer on Death, or pass by contract such as annuities, life insurance and IRAs). It’s important to note also that a revocable Trust becomes irrevocable once the Grantor dies.
On the other hand, with an Irrevocable Trust, once it is created and executed, it is generally not revocable, even by the Grantor. Since assets that are transferred by the Grantor are Irrevocably placed into the Trust, an Irrevocable Trust will usually protect the Trust assets from any creditor claims against the Grantor, (potentially even Medicaid Claims) and may reduce or eliminate both income and estate taxes to the Grantor, yet still provide for the multigenerational transfer of assets to beneficiaries. However, one should carefully consider the consequences of the loss of control over those assets before creating and funding such a Trust.
In addition, people often create Trusts inside of their Last Will and Testament, which will thus not be funded until after they pass away. All assets must first pass through the probate estate prior to funding the Trust. These are called Testamentary Trusts. While the Will (and the Trust contained therein) is revocable by the creator until they pass, once they are deceased, their Trust becomes Irrevocable.

A trust can benefit many individuals, even those with modest assets. For instance, a Trust can be used to manage your assets if you should become incapacitated and thus unable to handle your basic financial affairs during your lifetime. A Trust can be the proper mechanism even if your modest estate assets will be used to provide support for minor children or individuals with special needs. A Trust may also be necessary to ensure proper oversight for the management of assets and to coordinate appropriate distributions to your beneficiaries.

Privacy: Unlike a Will, which becomes a public record during the probate process, a Trust can keep your estate and its distribution provisions private.
Avoiding Probate: Most Trusts do not require any court involvement: They usually completely avoid the probate process and can thus make the transfer of your property to beneficiaries quicker and less expensive. A Will, on the other hand, MUST be presented to the Probate Court to confirm its authenticity and to officially appoint your Personal Representative (and to appoint a Trustee for any Trust established within the Last Will and Testament).
Managing Assets for Beneficiaries: If you wish to provide for minor children individuals with special needs, or beneficiaries who may not be adept at financial matters, a Trust allows you to set specific terms for how and when they receive their inheritance. A Trust can provide distributions for specific purposes (health, education, or support, for instance), or to be partially or fully released when the beneficiary attains certain age thresholds. A Will, however, will generally provide for a direct distribution of the inherited assets to the beneficiary who will then have full control and authority over how and when it is used.
Incapacity Planning: A Trust can be used to manage your assets if you become incapacitated. This can provide peace of mind that your financial affairs will be handled according to your wishes, for your benefit, until you pass away. A Will does not become effective until AFTER you pass away.
Protection of Assets: Trusts can offer some protection of assets from creditors and legal claims. A Will generally provides that the decedent’s debts be satisfied prior to distribution to beneficiaries.

When considering your estate plan, you should first asses your current physical and mental health and review your financial situation in depth. Take inventory of your assets and liabilities, including real estate, life insurance, retirement accounts, personal property, cash and investments, business interests and any other asset or income stream to which you are entitled. Once you have a full understanding of all of your assets and financial obligations and clarify your wishes for how you would want your assets to be distributed after your death, you can then determine what is most important to you during the remainder of your life and after your passing.

Think about the individuals that you would most trust to handle your medical and financial decisions, both before and after your death. Don’t forget to consider the location of the individuals in relation to your estate assets, the skills and expertise of the individuals and the roles and tasks that they will be charged with either during your lifetime or after your passing, as well as the other obligations that those individuals may encounter in their own lives. If the tasks are too burdensome or beyond the skills and time that the person could feasibly dedicate to your affairs, or if the authority you grant to one family member may disrupt other family relationships, you may want to consider a professional Power of Attorney, Trustee, and Personal Representative.

Greenfield Savings Bank Wealth Management has a highly skilled team, virtually the only team with a local presence in Pioneer Valley qualified to administer your Trust or Estate at any time – usually when you become unable to serve during your lifetime, or after you pass away. As a corporate fiduciary, we have the highest obligation to act in the best interest of the client and to honor the terms of the Trust document as presented. We keep detailed records of every single transaction and provide annual accountings to the appropriate people every year. As a professional investment advisor, we can not only manage the terms of the Trust, but also invest the assets in a way designed to meet your goals as stated in the document, manage the risk and return, as well as tax efficiencies. Of course, we understand the complicated nature of Trust taxation as well and can incorporate that knowledge into our process every step of the way, in addition to being responsible for all tax filings. Moreover, our team will ALWAYS have someone with proper skills and experience to manage your Trust from this generation and beyond. As a highly regulated Bank Trust Department, you can be assured that your family or other beneficiaries are protected by the zealous oversight of the FDIC and MA Division of Banking annual audit process.

The term power of attorney (POA) refers to a legal document that authorizes a designated Agent to act for someone else for financial, contractual and other legal issues. As such, a POA gives the agent or attorney-in-fact the authority to act on behalf of the principal (the person creating the document whose assets are at issue). The agent may be given broad or limited authority to make decisions about the principal's property, finances or investments.
The Power of Attorney can be effective immediately upon the creation by the principal, or it may not become effective until the happening of a specific event – usually the incapacity of the principal.
A power of attorney is a legal document wherein the principal appoints an Agent or Attorney-in-Fact and outlines the authority that they will bestow upon their Agent. The terms of the instrument will define the extent of the powers (consider gifting, estate planning, whether or not the Agent can be paid for their services, etc.), and whether the power to act as Attorney-in-fact (Agent) has the immediate authority or whether it can only be used in the event of a principal's temporary or permanent illness or disability, or when they can't sign necessary documents. Accordingly, the principal must choose a Trustworthy agent who has the skills and ability to handle their affairs for them. When the Agent is acting as Attorney-in-Fact, they are actually stepping into the shoes of the creator and must act in the best interest of their Principal.

Many things that people do may be done through agents under a Power of Attorney. You may authorize an Agent to serve for only specific transactions or the authority given may be much more extensive. The powers may include the authority for the agent to perform these types of tasks for your benefit:
• Purchase or sell assets;
• Create binding contracts;
• Apply for public benefits (such as Medicaid, Medicare, or Social Security) for you;
• Manage your business (in some cases);
• Pay your bills and collect your income;
• Invest your money;
• Manage your investments;
• File a lawsuit on your behalf;
• Make gifts to specific individuals (including the Agent);
• and so much more!
You must specify in the Power of Attorney document what powers you are granting to your Agent and when those powers are to take effect.

Unless you have been declared legally incompetent, you should be comforted to know that giving someone a Power of Attorney does not prevent you from making decisions or conducting business for yourself. If you and the agent disagree, your decision governs. The Power of Attorney can be revoked by you at any time (assuming you are competent). In that case, it is important to notify your financial institutions that any prior Power of Attorney previously granted has been revoked.

A Last Will & Testament (a “Will”) is a legal document that sets forth your wishes regarding how your assets and property will be distributed after your death. It allows you to specify beneficiaries and nominate a Personal Representative to manage your final affairs and carry out your wishes for disposition of your remaining assets. It can also address other matters such as guardianship of minor children, continued management of business entities, etc. Failure to prepare a Will typically leaves decisions about your estate to the Massachusetts intestacy laws to determine how your assets are distributed.
When you pass away, your Will must be submitted to the Probate Court that will confirm the authenticity of the document and issue Letters Testamentary that will formally appoint your Personal Representative.

Probate refers to the process where a decedent’s assets are administered through the Probate Court. If the decedent had a Will, it is filed with the Probate Court having jurisdiction over the estate together with certain documents and a Petition. The Petition asks the Court to declare that the Will is a valid and genuine Last Will of the decedent and should be used to determine who is entitled to receive the decedent’s probate assets. If the Court grants the Petition, documents confirming the Personal Representative’s (known in some states as the executor or executrix) authority will be issued. These documents are used by the Personal Representative to collect and distribute the estate’s assets according to law and the provisions of the Will.

After the Will is admitted to probate, the person designated in the Will as Personal Representative is granted what are known as Letters Testamentary, or Powers of Appointment, which give the Personal Representative the power and duty to collect and value the decedent’s assets, pay all of the person’s just debts and funeral and administration expenses, file whatever estate or income tax returns that may be required, and, when all of this has been accomplished, distribute the remainder of the assets to the beneficiaries.

Not exactly. While the named Personal Representative is nominated in the Will and should begin to gather all the information necessary to properly administer the estate, it is important to note that the official Appointment must be formally endorsed by a Court. A petition must first be filed with the appropriate Court to determine that the Will is valid and that you are fit for appointment as a fiduciary. Until then, you do not have any authority to control the assets or settle the estate. Once the Letters Testamentary are issued, hopefully you will have gathered enough information about the deceased person to begin the administration (gathering all the assets, paying all the decedent’s valid expenses), and consider making distributions to beneficiaries. Please note that creditors generally have a one-year period to file any claims against the estate, so you should anticipate holding at least some of the assets until the 13th month.

A person who dies without a will is said to have died “intestate.” Because the deceased person left no direction on how to dispose of their assets, state law provides for how those assets will be distributed among the surviving members of the decedent’s family. A certified copy of the death certificate needs to be filed by an appropriate person along with a petition for administration. The Petition should be filed in the proper Court located in the county in which the decedent was domiciled at the time of their death, but an additional petition may need to filed in other jurisdictions if the deceased owned property that is not subject to the jurisdiction of the original court.

The death of an individual is riddled with tax considerations, questions, and strategies. Tax Returns that may be required include any unfiled personal income tax returns of the decedent, final federal and state personal income tax returns; federal and state fiduciary income tax returns reporting income earned after death; and federal and state estate tax returns if the value of the estate is large enough to require estate tax returns to be filed. In addition, if the deceased was a business owner, the Personal Representative may need to complete those business returns as well until the business has been properly transferred to the beneficiaries, sold, or otherwise no longer has reportable income.

The cost and duration of probate can vary substantially depending on many factors such as the value and complexity of the estate, the existence of a Will, the cooperation of the interested parties and the location and nature of property owned by the deceased. Will contests or disputes with alleged creditors over the debts of the estate can also add significant cost and delay.
Most estates can be settled though probate in about 13 to 18 months, assuming there is no litigation involved, while Trust administration and other types of asset transfers may take as little as a few weeks or as much as several years depending on the situation.
Common expenses of an estate include the final expenses of the deceased person (including any unpaid taxes), carrying costs for any assets that must be maintained during the period of administration (ongoing real estate taxes and utilities through the time of sale, personal property or auto storage and maintenance, etc.), Personal Representative fees, out-of-pocket expenses (mileage, postage, copy fees, etc.), attorney and accountant fees, legal and court filing fees and appraisal costs.

At first glance, it may seem that paying for a corporate Trustee or Personal Representative may seem to be expensive. However, when considering the variety of expertise needed to administer your Trust or Will provided by our team (tax, legal, administrative, and retirement experts in house), we can not only save you time and money, but we can also add substantial value. We will also ensure that the interest of any beneficiary and even a Co-Trustee, is protected by our diligent record-keeping, tax efficiency, and legal knowledge.
Each time a beneficiary claim form is presented to us, there are tax consequences to consider for both the Trust/Estate, as well as the Beneficiaries. Making the right decision the first time is critical, and we can advise each of the parties and guide them through the process of completing the claim forms to match their respective goals. In addition, we save considerable time and effort by completing the forms accurately and ensuring that all of the right documents required by each custodian who are holding your assets are submitted. This ensures timely processing for your beneficiaries.
Since our Trust Administration fees are largely all-inclusive, the fees are quite transparent. You can estimate the expenses of administration at the onset. Moreover, for our Estate Administration, the Personal Representative fees are based solely on the time used in the administration of your Estate. If the Estate is in good order when you pass away (personal income taxes are current and in good order and information about your assets, expenses are readily available, your family tree is clear and your beneficiaries are easy to locate and communicate with) the time and energy spent on your estate is streamlined, and of course, the fees are minimized.