Ann Zuraw of Zuraw Financial Advisors and David Warren of Bridgeford Trust talk about the advantages of a trust situs in South Dakota.
AZ: Hi. Welcome. I’m Ann Zuraw from Zuraw Financial Advisors out of Greensboro, North Carolina, and today we’re going to talk about why a trust today is no longer your grandmother’s trust.
AZ: David, I’m going to ask you this question. What has changed from having a trust? I’ve actually always been kind of against trusts because it meant that you didn’t trust the person that was the beneficiary. But, today’s trust, it’s really different. Can you just talk about, as a lawyer from a legal perspective, and why South Dakota…
DW: I love this question because the trust industry is going through, really, almost like a revolution in terms of the kind of control now that can be exerted around these trusts. And, it’s actually even changed the whole idea of whether a trust is really irrevocable anymore. And the foundation of these new trusts and these modern trust laws is the concept of the directed trust which really bifurcates legal duties and separates what has traditionally been bundled together at the large trust companies which, as you know, they have been under a lot of scrutiny and criticism lately because of their high fees and because of conflicts of interest that are very clear
AZ: One of the benefits that I realized, too, if you have a family business, and there are a lot of family business owners out there, a lot of women business owners. And you want to keep control and have it stay in your family, yet you do want to pass it along to the next generation, and so from a planning perspective, having a trust can actually do both.
DW: Certainly. Inside of these directed trusts, they create various roles, really for fiduciary positions. And there’s the ability, frankly, to create three of them. The distribution committee, an investment committee, and then a trust protector, which is part of this overall structure.
AZ: I think what I like, it’s not your grandmother’s trust, because the trustees of yesteryear, we’ll say, or the past, had complete control. You know, we’re all fiduciaries. So, that means that we have the best interest of the beneficiary, as trustees, but it was just one person. There was a bank, and they did the investments. They might be the trustee, and then they decided the distributions. I’ve seen women, actually, in their 70’s, and they’re the beneficiary of a trust. And, they’re really trying to get money to be able to live in a retirement home, and the trust is saying, “No.” And, so, having that control is really important, and who are they looking out for? And, so, by separating the duties and, correct me if I’m wrong, maybe you can explain further that you could have a different investment person, different people on the distribution committee, you have Bridgeford Trust as the administrator, and it actually keeps everybody holding themselves with accountability.
DW:Absolutely. And I think that’s the best part about it. It keeps us all separate. It keeps us all independent of each other. But, it allows you and I to be collaborators, so on its first blotch, you would wonder why a trust company and an investment management company are sitting together talking about these concepts. But, it’s because we partner together, and we can partner together. And that collaboration has replaced competition. And somehow we’re collaborators instead of competitors, and the people who win are the clients because the fees are lower and they have much more control. And the conflicts of interest go away.
AZ: And you can amend it as your life changes if you need to. It’s not permanently irrevocable. So, appreciate you guys listening today. Or, “Y’all.” And, if you have any questions, don’t hesitate to call myself, Ann Zuraw, at Zuraw Financial Advisors, or…
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