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What is a Trust Company?

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Bill Kerst President, Community First Trust Company. He has been conducting educational seminars on IRAs, asset management, and trust management for over 15 years. He has served as the moderator for the Income Taxation of Estates and Trusts course offered by the Arkansas Society of CPA’s and provided many seminars to civic and church groups in the community. For more information, call 501-520-3660.

I recently had a unique telephone call regarding my article on Roth IRA rollovers in last month’s issue of Hot Springs Life and Home and what really stood out was the last question, “What is a Trust Company?”
Perhaps the best way to explain what a trust company does is to review what a typical day looks like. As I’m writing this article it is 7:00 p.m. on April 13th and we are still at the office. Client tax returns have been coming in for review and client meetings. Those clients who are no longer able to sign their returns become our responsibility, so we review each return for accuracy before mailing to the IRS. Fortunately, our Hot Springs CPAs are very good, which makes our life easier.

Everyday, there are client meetings to review customer accounts, which can either be in person, or on the phone. Each client has a different investment goal – some desire income, some growth, others focus on safety, while others focus on fear. You factor in taxable, tax-free, tax-deferred accounts, real estate, and everything else they own, as you try to find an approach that addresses the personality and needs of the client.
Today was an unusual day as the parent of one of my classmates called to discuss estate planning for her granddaughter. She lost her daughter several years ago and now is concerned about how she will protect her granddaughter.

Then we had the issue of gold; is it investment property or personal property? If you are the beneficiary who inherits the investment property, you believe it is a capital asset. If you get all the personal property, well, guess what? You believe it’s personal property. (Note: If you are ever in doubt about leaving a specific piece of tangible property to someone, make good notes, take good photos, and remember one of my favorite quotes: “Don’t worry, that won’t happen in my family.”)

We also met with a client to discuss the issue of managing a closely held business. Right now everything is fine; the person who created the business is doing great, fulfilling his goals and enjoying his career. The big questions were: “What happens if I can’t go to work tomorrow? What is the exit strategy and how can you take over my business?” Great questions! No one can run a business like the person who created it.

As a trust company, our principal contribution is to bring sound judgment to situations that are unique to each family, while developing an overall strategy that will meet the needs of all beneficiaries.

That’s what today and everyday is about, judgment. There are few issues more personal or more important to you and your family than your financial planning. The old adage of “failing to plan, is planning to fail” couldn’t be more true than as it relates to the financial world.

We’ll see what happens tomorrow!