Are you wondering how to take advantage of charitable giving deductions on your tax return, make a greater impact with your donations, or weave philanthropy into your family’s legacy? In this Off the Wall discussion, we’re changing things up. Monument’s Emily Harper, CFP® jumps into the hosting seat to interview Jessica L. Gibbs, CFP about all things charitable giving.
David B. Armstrong (Co-Host):
Welcome to our newest episode of Off the Wall podcast. With me, Dave Armstrong and my co-host, Jessica Gibbs. And today we have a really exciting episode in store for everybody. But first, before we get going, just a few things. Make sure that you’re subscribing on your favorite podcast player, and if you really enjoy the content that we’re putting out, give it a little review. We always prefer five stars, of course, and maybe leave a little written review or anything like that really helps with some visibility of the podcast. So with that, Jessica, why don’t we go ahead and get started with this episode?
Jessica Gibbs (Co-Host):
Yeah, I thought before we introduce our guests, I wanted to outline a scenario that we hear often. I think it help kind of can frame the context of what we’re talking about today. So I want I want everyone to picture this. So we have a couple they’re updating their trusts and state documents. They have a couple of kids. Maybe they’re high school age, college age, they’re responsible kids, They’re good kids, but they’re not really ready yet to inherit significant wealth. And you know, that wealth that the couple has built is probably likely going to last beyond their kids is going to pass to generations who aren’t even born yet. So that couple is going to have to answer two big questions when they’re writing their documents, among many others. But the first being is who would help my kids be stewards of this wealth if we weren’t around, particularly while they’re young? And then second, you know, who do you name as trustee to help future generations? You know, every person that you know who could serve as a trustee probably won’t be alive and able to help when these future generations that you don’t even know yet inherit your wealth.
David B. Armstrong (Co-Host):
And a lot of these topics. Well, this specific example comes up all the time when we’re talking to clients and new prospective clients, too, because we like to frame this conversation in the context of your money can really only go one or four places, right? You can spend it during your lifetime. And to the extent that a couple or a single person passes away at that point, there’s only three places the money can go, right? It can go to friends and family as designated through an estate document. It can go to charity. And in certain cases, it can go to taxes. That’s it. Right. So having this plan in place is are really the legal instructions that are carried out after you’re gone about where you want that money to go. And in a lot of cases, there is always money left over after the second day of a couple happens. And that’s where this topic gets introduced. And really, the scenario, Jessica, that you put forth is such a common scenario with everything.
Jessica Gibbs (Co-Host):
Right. So this kind of leads to what we’re going to talk about today. This is where a independent corporate trustee can come into play. So to that end, we have two guests on the podcast today, Michelle Diamond and Heather Savage from Cumberland Trust. Cumberland Trust is an independent trust company based in Nashville who’s focused solely on helping families with their trust and estate administration, in addition to personal trusts administration, Cumberland also specializes in the administration of special needs trusts and complex illiquid assets. And I do want to point out you may have one particular word I keep saying, and that’s the word independent, and that’s something we’re going to talk more about, why that’s important. But let me introduce Michelle and Heather. Welcome to the podcast.
Michelle Diamond (Guest):
Thank you, Jessica and Dave. We’re so excited to be here.
Heather Savage (Guest):
Good morning.
Jessica Gibbs (Co-Host):
Let’s start with the basics. What is a corporate trustee?
Michelle Diamond (Guest):
So a corporate trustee is an entity, and it can be an independent trust company like Cumberland Trust. It can be a large bank trust institution. And it is someone who takes the script or the words that you’ve written in your estate plan and do the best that they can to carry out those wishes, to carry out the intent of the creator of that trust document. I like to say a trust is a bucket, and the trust document is the instructions of what happens with the assets that are in the bucket. I think there’s a lot of perception that trust and trust administration is incredibly complex and it can be really based on the complexity of assets. But but what a corporate trustee does is come alongside the family and make sure that the intent of the creator of the wealth or the creator of the trust kind of kind of follows through. Heather, do you want to chime in from a corporate trustee perspective?
Heather Savage (Guest):
No, I think you I think you cover that very well, Michel, and I’ve been doing this a long time, and there are obviously all kinds of situations where families might want to create a trust. But a corporate trustee in our case is just an independent financial institution that partners with not just the family, but their teams of advisors, tax advisors, investment advisors and legal advisors, again, to carry out the wishes of someone who’s not here anymore. So we take those very sometimes complicated sounding words that the lawyers put on paper and we translate those to real life.
Michelle Diamond (Guest):
And I think, Jessica, you’ve already initially touched base on the concept of independent, which I know we’ll get into in a little bit. But I think most families have a perception that a corporate trustee is a big bank trust department, because years ago that’s what it looked like. I think the evolution of our trust industry over the last 20 years is bringing a lot more independent thought and partnership to families and advisors in that scenario. So I know we’ll get into that a little bit, but I think corporate trustee is just a trustee that, like I said, comes alongside the family and partners with them for the management, fiduciary management of those assets that are in that trust.
Jessica Gibbs (Co-Host):
Right. I mean, and to kind of even step it back further, like what is a trustee? I mean, the role that they’re playing and therefore that a role that a corporate trustee playing is, is you could be the one who is essentially saying yes, no, you can take a distribution from this trust, you know, beneficiary. And I think one of the things you guys have talked about is that your role as a corporate trustee is it isn’t just being I mean, I guess there is an aspect of your being the gatekeeper, right, on making sure that the beneficiaries are using a trust and in the way that the people who set it up intend, but also doing a lot of educating for beneficiaries to understand how they should think about a trust. Or can you talk more about that, like that education aspect?
Michelle Diamond (Guest):
Well, absolutely. I think even just to take a brief step back, you know, how we answer the question about what we do depends on if we are talking to the grantor or creator of the trust who is working on that estate plan and trying to make those determinations of how they want the assets that they have, you know, established and built over their lifetime, how they want those handled, distributed, managed when they’re gone. And then it’s a even more enhanced conversation when we’re talking to the beneficiaries who are the recipients of that wealth, trying to understand why that trust was created, what the intent and purpose is, how they can use it to support what they’re doing on a day to day basis, and what that legacy of that wealth is. And so, you know, I think what a trustee is responsible for is taking that document, taking that blueprint to the best of our ability, understanding the intent of the creator or grantor, and then being able to translate that message to those beneficiaries, whether that wealth is going to be held in trust. Her effects period of time, whether it’s going to be generational wealth transfer, as you mentioned. And so, you know, our job is to be able to interpret that document, to be able to meet those expectations of distributions, to know when to say no in partnership again, or when to say maybe not now and help be the stewards, as you mentioned, of that wealth in support of what that family’s trying to accomplish.
Heather Savage (Guest):
And I think I would add that often, I think both the people that are creating the estate plan and then the family that eventually are the recipients of that wealth and trust have concerns. Why is it does it feel punitive? Did my parents not trust me to, you know, did they not like me or whatever? You know, they’re seasoned security issues that sometimes pop up. And what I very often lead with talking to families. And you also have to understand that when we meet the beneficiaries, it’s often at quite possibly the most difficult times of their lives. They they’ve likely lost someone that they cared deeply about, struggling with the grieving process and then now are being asked to kind of step into this financial situation that seems complicated and overwhelming. And so I try to distill it down by the fact that your parents or your grandparents or whoever it was set this up for you. They created your team. They set up a network so that while you are dealing with the grieving and trying to figure out how to make this transition, you have these professionals in place that knew us, knew what our priorities are, and our financial advisors have worked with our family sometimes for decades. You know, the attorney you know, we met with the attorney ten or 15 times putting this thing together. And so this team is here to not only help you transition through this initial phase, but to support you long term and to protect those assets, to let you know that you aren’t going to run out of money. It’s it’s our job to make sure that you’re professionally advised and to be your support, not to be kind of a parental naysayer or guidance type situation, but that it’s that it’s meant to be a support network. And you try to emphasize.
Jessica Gibbs (Co-Host):
Oh, I love that reframing.
David B. Armstrong (Co-Host):
So just a really quick example, right? Let’s just say that my parents right, I’ve got a sibling and I’m just can make a believer, right? Let’s just say my folks have like 2 million bucks and their trust in estate plan says that I’m the executor, unnamed. So in a really simple case, because I think that applies to a lot of people. Right. So there’s two embedded questions here. One is, why would my parents want to involve a corporate trustee if they’ve already named me? And then, two, is there any sort of consideration that people should factor into whether or not they incorporate a corporate trustee? That’s a mouthful as it relates to their net worth.
Michelle Diamond (Guest):
Great question. Heather, you want to tackle at first. You may jump in on that one.
Heather Savage (Guest):
You know, I’m happy to start. I mean, I I’ve done this a long time and so I’m quite obviously biased. But, you know, I tend to be of the opinion that we live at the intersection of families and money, you know, and all of the intricacies and craziness that can kind of go into that. The family dynamics. You know, you mentioned a sibling, and often in the case of the executor in settling the estate, it’s a very specific job. You know, you’re marshaling and inventorying the assets, you’re paying the bills. But then when all of the dust has settled on that, you know, you have what comes next. And so let’s say you have two children and this is very, very common. It feels like every family I talked to has this situation where one, even if they’re not there isn’t one child that’s a black sheep or a problem. There’s always the child that’s just a little bit more on top of the financial situation, maybe a little more savvy. And they trust and respect that child’s ability to navigate. We’ve just seen time and time again that when you place siblings in a position of responsibility over each other, especially when it comes to money, it really does strain that dynamic in a way that you just can’t kind of predict going forward. Some of those insecurities, you know, that come up from their prior childhood and whether who mom liked best and that sort of thing. It just creates a situation where one sibling is having to go to the other to ask permission for things and then just, you know, that makes I always tell people, you know, think about what Thanksgiving dinner looks like after that situation is implemented.
David B. Armstrong (Co-Host):
Yeah. Thanksgiving dinner is bad enough sometimes for that.
Heather Savage (Guest):
Yeah, that’s right. Yeah. So let’s ignore religion and politics and all those other things. Then you say, you know, you show up to Thanksgiving saying, I want to go on vacation next year, sister. I’m going to need to take a distribution for my trust. And so having her having to navigate that. But in terms of wealth, you know, there are all kinds of situations. I think most people perceive that only the ultra-wealthy can do this sort of thing, and that’s just simply not true. Your situation of a $2 million estate split between two siblings is a respectable amount of assets to leave in trust. There are situations where maybe the management and expenses of maintaining a trust do not support a corporate trustee. But we I think we do find that sometimes we’re named in those situations. Maybe when they created the estate plan, there was significant wealth, but over time it’s deteriorated or they gifted it away. And maybe the amount of wealth that’s left over is not significant or enough to support the costs of maintaining an ongoing trust. So we do take the position that we’re we’re a resource. We want to help the family in that situation find the appropriate solution. And I think we’ve all come a long way in the legal and financial world. There are a lot of options for navigating those situations. But again, the situation you presented really made sense.
Michelle Diamond (Guest):
And I think, Heather, just to kind of to piggyback on that conversation, I think, you know, Dave, your question with regards to asset size, I think we’re seeing that’s kind of what we call a bread-and-butter relationship. We see we see a lot of those opportunities. We also see kind of the evolution of those relationships as to why you want to establish that trust regardless of size. You know, we have, as Heather mentioned, kind of those complex family situations, but we also just see family dynamics in situations. There’s a there’s an inherent asset protection when those trusts are created. And so sometimes we see as either assets diminish or beneficiaries age, you may not want your 25-year-old child or even your 30-year-old child to have full access. But if they’re, you know, 45 or 50, we used to see the distribution of those trusts at age attainments. But now what we’re seeing and in the evolution of our industry is the the appointment of co-trustee or individual sole trustee. So I think that there’s, you know, as our industry kind of changes and navigates based on the needs of families and beneficiaries, we see, you know, legislation changing as well. And there’s a lot that’s happened in the last 20 years and trust legislation. I think, you know, there’s a lot of having grown up my first six years of my career in a large bank institution, there were a lot of benefits to bank institutions 20 years ago. I think there’s a lot of large institutions that still do this job well. And so I think, you know, families have to be able to evaluate what they’re looking for in a corporate trustee. At the same time, there’s a lot of families out there that just hear the term corporate trustee, and that’s just perceived as a very bad thing. It’s either the bank has control, they don’t you know, they’re just seen as a distributor that’s going to receive something. They don’t have a active relationship with a trustee. And so I think, you know, you have to look into every family’s unique situation. And, you know, even in your $2 million scenario, as we’ve talked about, an individual trustee being appointed, there may be an opportunity with a family that that still works. But what we consistently see as Heather’s example is you have that one child that, you know, very capable or child that’s willing to kind of tackle that and take that on. But at the same time, is that the person that you want to burden that we have an estate planning attorney that gave us the example one time that if a family sits down and says, well, I’ve got I’ve got my daughter like that too, I want to do it. She can handle it, she can do it. And the attorney says, Well, tell me about your daughter. And she’s like, Well, you know, she’s a mom of three. She’s a working mom. She is running her own business. And the attorney said, well, she sounds really busy, you know, Are you sure that that’s, you know, one more you know, one more expectation? And I think, you know, being in this industry, my family looks at me and says, Do you want to do this? And I’m like, No, like, I will. I will help or I will guide or I will make sure you have the right resources. But being able to retain that that family support of each other. And we joke about the Thanksgiving dinner, but we also just the process of some trust documents say you have to, you know, review by their financial circumstances before you can make a distribution of a trust. So do you really want to ask your siblings for their, you know, 1040s to be able to review their full financial situation before you, you know, make a distribution. So between the kind of the stigma of the big bad corporate trustee to, you know, really kind of understanding what a trust how a corporate trustee can support what the family’s doing and even the evolution of being willing to serve in it. In our model, an independent model with co trustees, with families, because there’s definitely value in having the family or a family member speak into the ongoing administration of what parents wanted or what the grantors wanted. So just looking for those nuances within the different options that you have out there, I think is you really can find the right fit for your family.
Jessica Gibbs (Co-Host):
I think we’ve been talking a lot about the family dynamics of if you have like one singular trust and therefore you have like one sibling is in charge of okaying distributions for other siblings. I mean, another common trust in a state scenario is, is mom and dad pass away and their trust is then split into separate trusts for each beneficiary. And each beneficiary then maybe becomes their trustee of their own trusts at a certain age. But I think what you’re describing is, is like maybe that person actually might want to have someone as an a corporate trustee to actually help them do this or to do this for them like there may be reasons to think about having a corporate trustee, even if you are splitting the trust into two separate trusts for each beneficiary. I think a lot of times we’ll get questions about, okay, like what’s the order, right? When you when you are creating a trust document, you’re going to. Okay. I’m going to say this person is a trustee. But within that, you’re also saying this person or entity is going to be the primary trustee. This person or entity is going to be the contingent or secondary trustee. So we get a lot of questions about like, should you list a person as a trustee and a corporate trustee as the secondary. Should you list a corporate trustee as the primary trustee. Should you list a corporate trustee as a co-trustee with a person, like how should you even be approaching?
Michelle Diamond (Guest):
Well, and the answer is you can do all of those things.
Jessica Gibbs (Co-Host):
You can do all of them.
Michelle Diamond (Guest):
You can you can do it. Whatever best kind of serves your family. I think what we you know, we think the more important question is who has the authority to make a change if it’s not right? You know, so in any of your examples, like if you have if you have confidence in one of your siblings or your children to be able to be their own trustee. But you also I mean, the reality of our world today is you might really trust your your son, but you’re you think his wife is questionable. I mean, that’s just, you know, the in-law situation. And so whatever you want to establish, you want to make sure that there’s somebody that can help make a change. So if the individual trustee is named initially, they make sure that individual has the power to add a corporate trustee if they make the decision that that is helpful.
David B. Armstrong (Co-Host):
Oh, that’s great. That’s a great suggestion.
Michelle Diamond (Guest):
And that’s one of the things that we see, you know, very consistently at the same time, you know, allow that if you want to name the corporate trustee, but you want the individual to come alongside as a co-trustee at an age attainment. So a lot of times we’ll see. You know, a trust is established if the beneficiary is over the age of 25 or 30 and it’s their trust, then they’ll serve as co-trustee with the corporate trustee, you know, that could be a permanent thing where that could be at age 40, they can become their own trustee. I mean, you can you can customize those documents in the way that you believe is best going to support your family. And what I might do today, you know, at 50 with my oldest child just turning 20 may look very different, you know, ten or 15 years from now. And you can always modify those documents based on the change. But we always just encourage families to make sure there’s a flexibility there, that if you start with a corporate and then make sure that there’s an individual or someone who can step in and say, hey, that corporate trustee may not be doing their job, we want to move over here to a corporate trustee. So for us, it’s about not just naming them, but providing the flexibility to make a change of something needs to be a change. And identifying the individuals could be, you know, could be financial advisor, could be attorney, could be family friend, could be those beneficiaries themselves that have the right to make a change.
Jessica Gibbs (Co-Host):
I think this really underscores the need to be really thoughtful when you’re setting up your trust documents. This is not something that you kind of rush into. I mean, I’m thinking about it both in terms of what you’re talking about, about trustees and being able to make changes, but also in terms of language around distributions, because you were saying that you guys as corporate trustees, you’re going to go to the trust document and as much as you can be thoughtful and specific in your trust document, that that then gives you guys as trust officers the ability to better kind of serve out the intention of the grantors and the intention of the trust.
Michelle Diamond (Guest):
I want to address your question about the importance of the decision. I think that corporate trustee appointments and documents are probably often a 30 second decision. I mean, I think it is your right to identify the importance of at least thinking through it. And we’ve especially working with the financial advisor community, we’ve been asked time and time again, you know, how do we make sure that whoever is working on, you know, working with the families or working on these estate planning documents understands the full picture. And we’ve told this story for years because we think often and let me say the estate planning community is stellar and working with their clients. But I think historically the question was, hey, here’s an estate planning document. We know there’s a value to establishing a trust. Who do you want as a trustee? And they’re sitting there and getting ready to finish these documents and signing, and they’re like, Well, we’re really not sure. And they’ll say, Well, where do you bank historically? Where do you bank? Well, I bank at PNC Bank. Okay. We’re going to put them in. We can always go back and change it later. You know, there wasn’t a question about who manages your assets. Is there a trust company affiliated with the entity that manages your assets. When you’re gone, do you want that financial advisor to keep managing those assets? When Cumberland came into existence 21 years ago, those conversations didn’t happen. They happen all the time. Now they happen because advisors are working on the planning side, educating their clients. We’re all working with the clients in conjunction with the estate planning attorneys. It is a much more holistic approach. So there is definitely the importance being placed in making those decisions. And I think all the advisors that are involved in that situation or are benefiting the family and the support is coming in in a better way.
David B. Armstrong (Co-Host):
Help out because I think one of the most paralyzing components of this whole thing from the client’s perspective is they’re scared that if they make a decision, it’s irrevocable because that word gets used so much in trust in estate planning, right? Like, oh my gosh, if I set this up and I sign these docs. There’s no unwinding this or. Right. So what can be done to assuage that fear and, a quick scenario would be what would happen in the event that a corporate trustee wasn’t doing their job and needed to be fired? Is that an irrevocable decision?
Heather Savage (Guest):
I think we’ve all in our respected professions had clients. It’s just incredibly common that it can take them years to get through the estate planning process. Because you’re right, when they start thinking about the magnitude of the decision that they’re making, the longevity of how long this kind of relationship is going to go on long after they’ve left this world. It is paralyzing, particularly if you’re dealing with any challenges with your children. Again, think of special needs or we unfortunately deal with a lot of family members that have addiction issues or mental health issues. And so trying to put a plan in place that could last, you know, not just multiple generations, but certainly for the current beneficiaries for the rest of their lives, that it is overwhelming. So I talk a lot with people about the fact that these are living documents that as long as you’re still living and competent, they can be modified. I think it’s incredibly common for people to tweak their documents within a couple of months of signing them after the stress has worn off and they’ve had some time to sit with them and kind of digest it and think about it. It’s so incredibly simple to just change a paragraph or a sentence or a percentage. So I tell people to think, not so far in the future, you can’t possibly predict what 20 years from now is going to look like, not just what your family or your children are going to be doing or what their lives are going to look like. But what markets and world events and taxes and legislation are going to look like? So think maybe in five year increments. We all know that we’re supposed to review our plans every few years. We all mean to do that. But, you know, it does help distill it down so they can make decisions based on what things look like now. But I can’t emphasize enough how building flexibility into these documents is crucial. I talk a lot about I here in East Tennessee, where I happen to live, where we have close proximity to the Oak Ridge Nuclear Laboratory. So I deal a lot with nuclear engineers and they just want to micromanage. They want to do algorithms. You know, I want you to make a distribution to my child based on a certain percentage with a cost of living increase, you know, based on, you know, their FICO scores or, you know, whether they’ve done this or done that or what kind of grades they got in college. And, you know, I mean, I can’t really tell you the minutia they’re willing to go into in these documents. And it’s it’s a it’s a hard job to back them up a little and say today that makes sense when they’re 80 years old and need nursing home care, maybe not so much. And that kind of blows their mind because they just can’t think that far in advance. So I also one of my catchphrases is what we get paid for as a corporate trustee is to make good, prudent discretionary financial decisions based on all of the factors that present themselves at any given time, what their personal situation is, what their what their, you know, their family is, all of that kind of stuff. That’s really our job.
David B. Armstrong (Co-Host):
Here’s another scenario, right? Okay. What happens when you get a request from a beneficiary for a distribution for something that’s an extravagant purchase? Somebody comes in and says, I’m 22 years old. I want a distribution to buy the most expensive Porsche on the lot. Right. Talk through that.
Heather Savage (Guest):
So I have my favorite example and I think you guys maybe have heard this before, so I’m going to tell it again. True story. So I had a set of beneficiaries. There were three siblings. Their father had passed away and had left some pretty significant wealth, but mother was still living. So a mother’s trust was valued somewhere around $8 million. And so those three siblings knew and she was quite elderly in a nursing home care. So they knew that, you know, eventually their trusts were going to receive a pretty good infusion of cash. But because of the time these trusts were created and the tax exemptions that the children’s trusts were very small, they were only about $200,000 each. And so one of my old 50 something year old beneficiaries came to me and said he needed a new car. And this is a very common request in our world. And that’s fine. Fine. And I asked him how much he thought he would need, and I thought he said 16,000. But what he said was 60. And it turns out he had found and these are his exact words, his forever car. And it was a Porsche Boxster. And he you know, he was getting ready to kind of look at early retirement. And he had already made a deal with the dealer. And it was a really great deal. And not only was it a sports car, it was a used Porsche that was valued at 60,000. He thought it was a great deal. So, you know, the knee jerk is to say, well, that’s ridiculous. You know, it’s it’s half of your trust value on a non needed item, a luxury item. But the way I approached it, because, you know, this is a relationship, it’s a long term relationship with these beneficiaries. Let’s try to educate a little. So we talked about it and I said, look, you’ve got a car. Let’s what are you going to trade in? Let’s see if we can get this number down a little bit. Well, it turns out he had a Porsche already. It happened to be the Cayenne, but he couldn’t get rid of that because he has a dog. And the dog wasn’t going to be able to be in the Boxster because, you know, it’s a sports car, right? So he has to keep the cayenne. So this is getting more ridiculous by the moment. But it’s his forever car, Right. And he’s super passionate about this. So we talked about what could we distribute this year from the trust that we would be comfortable with. I offered to write a letter to the dealer that he was getting, you know, income distributions from this trust to help him qualify for a loan. And that, I think, is is what he really did end up doing eventually. He was incredibly annoyed with me at the time, just really frustrated because he wanted this car and he knew that money was there. He knew he had the money coming from his mother. But we worked through it. You know, I think he was able to get the car. He had sufficient assets on his own to make those loan payments. And he did come back to me later and say, you know, he kind of knew that had been an over-the-top thing. And his mother actually did live for another five or six years. So, you know, I’m like, you know, you’re not going to thank me in a few years when your trust is at zero and you really need that money and this is where it went. So that’s just a real life example of how we navigated something like that. Michelle’s probably got some, too.
David B. Armstrong (Co-Host):
Yeah. There’s also real quick on the Porsche thing. There’s also that old saying, like, if you can’t afford a new one, you can’t afford a used one because those things just break down. They’re so expensive to repair.
Michelle Diamond (Guest):
But yeah, that’s exactly right. Dave I wanted to take a step back and answer your early questions about your mobility and also about removing trustees, because I think it’s important, I think, for families to understand that. So when Cumberland started 21 years ago, there was a lot of change happening in our industry with regards to legislation. So families may not hear some of these terms. If you worked with a state planning attorneys, you’ve probably heard some of these terms. But you know, uniform dress code, Uniform Principle and Income Act, there’s a lot of things that were happening legislatively both in the States and I think nationally across the footprint to give a lot of families and beneficiaries a lot more say into the administration of trusts. It used to be, again, in this large institutional bank trust companies, there was a lot of perception that the money belonged to the banks because it’s, you know, like my boss years ago educated me that in every other aspect of banking as a client, you kind of go hat in hand, you go to your lender, you go to your customer service, but you’re going to them asking them for your help in financial situations. On the trust side of things, as a trust company, we’re going to families and saying, Let us handle your wealth. Let us, you know, come together and administer these trusts for you. But then inherently the families are coming to those trust companies asking for distributions and feeling like somebody else is in control of their wealth. I mean, that’s just kind of the way the structure was. And so in those large bank entities, you know, there again was this perception and even the banks themselves treated it like it was theirs, not the families. And back in the late nineties and early 2000, there was a lot of these changes that were going on legislatively. So we like to call the Uniform Trust code and the things that came out of that kind of the beneficiary Bill of Rights, it kind of gave these families the opportunity to come in and either almost in some ways like force an engagement with these trustees of being able to say there are things that we can do in a large bank. It used to be, well, if you want to remove the trustee, you got to go to court and the family would hear, well, it’s irrevocable and we got to go to court like we can never change anything. And that’s not the case anymore. And now a trustee, independent or corporate, that kind of stands in the way of allowing families to make those decisions is just kind of if they’re looked upon differently. So like here in Tennessee, if I stood my ground and say, no, you can’t remove me or you can’t fire me, we’ve got to go to court. Chances are that the judge is going to look at me and say, Michelle, why are you holding this family hostage? Like, you know, you can do this without going to court. You know, things can happen non-judicially. You know you can protect yourselves and the interests of the families. Like, why are you doing that? So I think there’s a lot of changes. You know, we like to say families say, you know, grandma set up the trust at whatever bank 75 years ago. It’s irrevocable. It can’t be moved. That’s not the truth anymore. We can review those documents. There’s a lot that can happen. Non judicially working with the estate planning attorney. Ultimately, you can go to court. It’s not impossible to go to court and navigate this thing. So a lot of what we do, working with families and working with advisors is we’re reviewing existing situations and helping put a blueprint together so the family can make the right decision if they want to make a move.
David B. Armstrong (Co-Host):
So it sounds to me like a best practice would be for someone listening who’s alive to build the relationship with a corporate trustee now. Versus saying like, okay, you know, this will all get hashed out, You know, whoever the trustee is or the executor, they’ll deal with Cumberland. I don’t need money or.
Jessica Gibbs (Co-Host):
Like, we don’t need Cumberland right now because I’m still alive. Cumberland’s role will start when I’m dead. And therefore, like, that’s when they’ll start, you know, thinking about that being the start date when they actually are named trustee.
Michelle Diamond (Guest):
Excellent point. Like we probably as members of the business development team, probably spend 25% of our time or more, depending on the day, talking to families about what we call future business. So the appointment in an estate planning as part of an estate plan where we would serve at some point in the future is future business for us. But the value that comes in advisors making recommendations, estate planning attorneys naming somebody like Cumberland and the opportunity to visit with the family just simply means that at some point down the road they’re comfortable with their decision. But they also, we are familiar enough to know what the expectations are for stepping in. And so we just know as an independent trust company that that is an important thing for us to do. Do we know every family that has named us in documents? Absolutely not. But especially the advisors that are working closely with families, making sure that these decisions are correct and are asking us to, you know, jump on a video call. I mean, that’s that’s what the last two years have done for us, is we’ve been able to see a lot more families across the country because everybody’s just kind of in this mode. And I think that’s one of the aspects that move forward will be able to continue to do that. But making those introductions.
David B. Armstrong (Co-Host):
So it was interesting because when Jessica first introduced you, one of the things I picked up on very quickly was, Hey, you’re in Nashville. Right? Yeah. And the first thing I thought was, I love Nashville. Who doesn’t love Nashville?
Michelle Diamond (Guest):
Right, Exactly.
David B. Armstrong (Co-Host):
But but then all sudden, it just dawned on me that does that matter to somebody where you are located? Like, are you subject to state laws or can you have clients nationally? And it doesn’t matter where you are.
Michelle Diamond (Guest):
So we have beneficiaries that we’re currently serving in 48 states, and those trusts are administered primarily in Tennessee. So we are a Tennessee trust company. And I like to joke that Tennessee isn’t always progressive in a lot of things, but they got really progressive in their trust laws 20 years ago. And as as kind of I was kind of referring to that really kind of allowing this to be a very trust friendly state, both to trustees but also to beneficiaries, to families. But we also have multiple states that we have what’s called reciprocity, which means we can administer Tennessee trust. For Texas, for example, we could administer a Texas trust. A Texas trustee can administer a Tennessee trust. We look at that on a case by case basis. Now, the other thought is, in the last 20 years, the attorneys that have drafted documents have drafted a lot more flexibility and documents because they know that beneficiaries are moving, families are moving around the country much more so than they did, you know, 20 or 30 years ago. So when I get a call from a advisor that says, Michelle, I’ve got a Colorado trust, can you serve in Colorado? What I say is let’s look at the trust document, because the trust document may contemplate that the administration of the trust goes wherever the trustee is. It may not prohibit that. We have jurisdictions like Florida that are definitely more challenging from that perspective. But we’ve even found workarounds working with the estate planning community in markets that might be a little bit more challenging for us to serve. So the first thing that we share with advisors and families is let’s, you know, an estate planning attorney says, let’s take a look. And if Cumberland is the right solution for the family, then we will figure out how to navigate that situation. Sometimes it’s in conjunction with a care trustee in those types of situations. So. So, yes, we can you know, we have beneficiaries across the country. We have trusts in different jurisdictions across the country. We just want advisors and families to call and see if we can be a part of the solution and we’ll be incredibly transparent for how that works.
Heather Savage (Guest):
So I would like to add kind of on the personal side of that, a lot of times when families ask that question, it’s not necessarily about what we call the situs of the trust or technically where it’s being administered. It’s how am I going to interact with my trustee, how am I going to see somebody? How am I going to know that my kids have that resource? And so, especially since we do so much work in the special needs arena, you know, there’s a lot of worries about, you know, are there going to be boots on the ground. And so we are incredibly proactive, I think, compared to a lot of trust companies out there about building networks of resources in the different states and places where we have beneficiaries and clients. Number one, we typically have teams such as yourself. You are local. Typically you’re only there working with you, although we have a lot of advisors, of course, that work nationally. So you’re there often their estate planning attorney and their CPA or there. And I don’t know that this is what we contemplated when we built Cumberland to start with, but Nashville is a very central location with an incredibly good airport. So I tell people our trust officers can be anywhere in the country in 2 hours. And one of the silver linings, if you want to call it that, of COVID, is we’ve been able to be proven that, you know, you don’t necessarily have to have a sticks and bricks office in every town and every place since we’re not a retail bank. You know, you’re not going to see retail branches in every town on every street corner the way you might for your local, local retail bank. But we have the ability to travel and to sit down with those families. So I think we’re very much committed. I talk about Northern Virginia a lot of times when I as an example, because of the way you’re all set up up there. I do. Let’s say I’ve got several clients in Great Falls, you know, and they’re like, Well, but you don’t have a trust office here. And I’m like, Well, let’s think about it. Maybe. Maybe we do do a Virginia Trust office at some point. Where would we put it? And when we put one, I said, What if we put it over in Fairfax or we put it in Richmond? You know what? Given the traffic situation where we all live up there, are you seeing yourself driving back and forth between Great Falls and Fairfax or Richmond? But, you know, I feel like sometimes because of our commitment to travel, we have the ability to sit down face to face with people, possibly even more than they would with their local institutions, just because of those kind of dynamics and with the technology that has grown up since COVID. It’s even better. I mean, we can do this kind of thing, you know, video chats and conference calls, and people are so much more comfortable with that now. So I think that that alleviates some of those concerns.
David B. Armstrong (Co-Host):
One last question before I turn over to Jessica for our wrap up question is, Michelle, you mentioned 48 states. I mean, everybody listening wants to know what the two states are now, right? You know.
Michelle Diamond (Guest):
North and South Dakota. You know, South Dakota is a great trust state. So I’m not surprised. And then just the population of and, you know, it could change tomorrow, too.
David B. Armstrong (Co-Host):
Yeah, exactly. So I just, you know, curiosity. I knew everybody’s going to ask that.
Jessica Gibbs (Co-Host):
So last question. If someone, you know, listening to this is thinking about, okay, yeah, corporate trustee may make sense as part of my trust and estate plan, when I talk to my financial advisor, I’m going to talk to my trust and state attorney more about this. Why, in your guy’s opinion, do you think an independent corporate trustee is better than going through a bank or a financial institution?
Michelle Diamond (Guest):
You know, those institutions still do this job well. I mean, we’ve learned through the years that there’s so much opportunity that there’s a spot for everyone. And I get, you know, kind of tongue in cheek. We were cultivating some relationships in Chicago several years ago, talking to a large institution who said, you know, we don’t trust clients under $75 million. And we joked that, you know, 74.99, where your people will take, you know, anything from that perspective. But the reality is they have a limited amount of resources just like anyone else. And in their you know, in their market and their dynamic, they have to make a decision where they fit. What I love about the independent model and people have for years asked Cumberland, you know, where is our competition? And our competition is growing every day like there’s more and more independent trust companies that are being developed. I think our platform from day one of making a decision to not manage assets, to work with families with wealth who already had asset managers, whether it was, you know, financial advisors handling their stock and bond portfolio, whether they were a family that had made their wealth in commercial real estate and had a real estate business or a family owned business, we felt that the value was and where we believe we bring expertise and support to the table as a part of the team. And I think independent trust companies that are founded that way with that philosophy are going to be a good solution for families. I think there’s a nimbleness often in those independent trust companies, whether they are specializing in a Heather’s reference. And we’ve tested based on special needs. You know, we are an organization that focuses on the administration of special needs trust. We often kind of almost get painted in a box with the perception that that’s all we do. It’s about 20% of what we do, but it’s because other organizations are not doing it that the recognition kind of comes here as to why we’ve made a decision to do that. And again, we think between our model and our service commitment, it’s something that we can do well. And other institutions have just decided that that’s not what they want to do and that’s okay. So I think that, you know, we have a marketing piece that I would love to share with both of you. For clients that ask, that is, you know, a list of potential questions to ask a trust partner. And I think that, again, that concept of it’s sometimes it’s a very quick decision or sometimes it’s a very hard decision if you’ve got the educational tools to kind of come along and ask, you know, how trust companies do things, then I think you’re going to feel a lot more comfortable in the decision that it’s made. Just to touch base real quick, again, on the competition question, we think that our biggest competition is individual trustees. You know, we think that the decisions of why individual trustees are kind of named or an appointed, if we can continue to educate the community that we can come alongside those individual trustees, then we think it’s the best of both worlds. They get the continuity. We didn’t get a chance to really talk about that, but the continuity of a corporate trustee versus all individual serving and with an individual partner, we often get the flavor, the knowledge, the expectation of the families in a different way. So we just think it makes it it makes a a better partnership relationship and working with the financial advisors and attorneys.
David B. Armstrong (Co-Host):
Heather Is there a website or some resources that you have that you could share with us as well?
Heather Savage (Guest):
Well, Why Yes, there is. So actually we made it pretty simple. It’s www.cumberlandtrusts.com and we’ve spent a lot of time I think we’ve updated it quite a bit over the years. It’s very interactive and then of course families should feel comfortable reaching out to the two of you and happy to get our individual contact information. But yeah, the website is always a great first stop.
David B. Armstrong (Co-Host):
That’s great. Well, we’ll be sure to get that document that you mentioned, Michelle. And if anybody’s listening, we’d like to see that just reach out to us and we’ll send it to you. We promise we won’t put you into the timeshare sales machine that people worry about. We’ll just send you the document that’s so just reach out. But this has been a fascinating conversation. I’ve really learned a lot. You know, it’s so confusing. People get so worried about making the wrong choices. And I think people will come away from this conversation really feeling a lot more comfortable about the flexibility of something like this and that they can reach out to you or go to your website and learn and learn more. But with that, Jessica, I think we’re at our time here and we should probably wrap up and say thanks.
Jessica Gibbs (Co-Host):
Yeah. Michelle Diamond and Heather Savage with Cumberland Trust. Thank you so much.
Michelle Diamond (Guest):
Know our privilege. Happy to do any time.
Heather Savage (Guest):
Thank you so much for having us.
David B. Armstrong (Co-Host):
Thank you.