Insurance company acting as Trustee

[AnnuityGuy63]

Does anyone know of an Insurance company acting as the Trustee.

Yes I know the client can be the trustee but in this case the judge is not allowing it and is requiring a 3rd party to act as Trustee. The judge allowed Schwab but they want to put the trust funds in a mutual fund and the client wants an FIA with 5% withdrawals available.

 

[DHK]

https://www.massmutualtrust.com/

 

[Allen Trent]

Does anyone know of an Insurance company acting as the Trustee.

Yes I know the client can be the trustee but in this case the judge is not allowing it and is requiring a 3rd party to act as Trustee. The judge allowed Schwab but they want to put the trust funds in a mutual fund and the client wants an FIA with 5% withdrawals available.

If you go the annuity route & you are able to get trustee/judge to agree to annuity being an acceptable vehicle, make sure you select an Owner driven annuity, not an annuitant driven annuity. Have seen a coupe horror stories with annuitant driven annuities maturing accidentally. The money becomes the annuitants at time of maturity, even if the annuitant was merely just added to satisfy the need for a living person being the annuitant. Have seen it happen for a church who had a pastor from 2-3 decades prior listed as annuitant

Also, IRS doesn't allow entity's, etc to utilize tax deferral, so it is likely the entity owner will have to report any interest earned annually even if not taken out of the policy.

 

[scagnt83]

Insurers will sometimes act as Trustee, just call them and ask.

I find it odd that he only wants 5% withdrawals when most offer 10% withdrawals.

There also might be a reason Schwab wants to use equities. Liquidity might be an issue. Schwab can most certainly place those funds in an annuity if they chose to. But as Trustee, they are tasked with doing the best thing for the client and the situation the Trust was created for.

And as Allen pointed out, there are no tax benefits to using an Annuity inside a Trust.

 

[DHK]

Last I remember, 5% is allowed for separate maintenance costs in estate planning.

 

[MAnnuity]

I believe Northwestern Mutual used to do this. Not sure if it was through a separate division (ie wealth planning etc), or if they still do. But I know I've seen it in the past.

 

[scagnt83]

Last I remember, 5% is allowed for separate maintenance costs in estate planning.

But a judge is ordering this, so it sounds more like a divorce.

And considering that Schwab thought a liquid investment was the most suitable option, it makes me wonder why something thats not liquid is preferred. Especially something less liquid than a normal FIA.

 

[Allen Trent]

But a judge is ordering this, so it sounds more like a divorce.

And considering that Schwab thought a liquid investment was the most suitable option, it makes me wonder why something thats not liquid is preferred. Especially something less liquid than a normal FIA.

Seen probate cases like this for minors too. Always wondered how a trust owner worked for the pre 59 1/2 10% penalty if annuitant or trust income bene are younger than 59 1/2. Even if interest was never actually deferred, it still has 10% penalty on taxable interest, etc

 

[scagnt83]

Seen probate cases like this for minors too. Always wondered how a trust owner worked for the pre 59 1/2 10% penalty if annuitant or trust income bene are younger than 59 1/2. Even if interest was never actually deferred, it still has 10% penalty on taxable interest, etc

When you only have a hammer, you try your best to make everything a nail. Square peg meet round hole.

 

[DHK]

But a judge is ordering this, so it sounds more like a divorce.

And considering that Schwab thought a liquid investment was the most suitable option, it makes me wonder why something thats not liquid is preferred. Especially something less liquid than a normal FIA.

The way I read it (I probably assumed a few things) is that:

1) They want principle protection (or at least the agent wants to make a sale on that basis).

2) They want the 5% available withdrawal for the trust rules, but the annuity rules can certainly be higher than that. Two sets of rules to balance out.

To me, as long as the annuity meets the requirements of the trust, it works.