What do banks do with money being held in a trust?

[TrustUser]

since trump took over and before covid, the stock market skyrocketed. are you telling me that you did not make any money during that time ?

 

[Krinkov58]

since trump took over and before covid, the stock market skyrocketed. are you telling me that you did not make any money during that time ?

It did not. Trump took office in quarter one of 2017, my trust's market value was 2,009,496.90. By first quarter of 2018 it was 2,040,587.52 for an increase of a whopping $31K. By first quarter 2019 it was 2,021,100.19, down almost $20K. And last quarter before COVID, 4th quarter of 2019, it was 2,142,503.07 which is an increase of of $121K but from there the value tanked by over $300K the next quarter,as I've stated.

My original question still stands, though...what are banks doing with the money they hold as trustee? Are they profiting off of it?

 

[TrustUser]

does a bear blank in the woods ? banks are private businesses. and the bigger the business, the more corrupt.

and in case you dont know, the fed is not a united states organization, despite its american sounding name

 

[Krinkov58]

does a bear blank in the woods ? banks are private businesses. and the bigger the business, the more corrupt.

and in case you dont know, the fed is not a united states organization, despite its american sounding name

Right, I get that...but I'd thought for some reason that banks couldn't just take a trust fund and invest it, reap the profits and give the beneficiaries the finger.

 

[TrustUser]

big entities do whatever they can get away with - you are the only person on your side. you have no control over the trustee, and you seem to have very little to say about the accountability of the trust. and there is a lot of money in it, from which a lot of other people can benefit.

nothing is perfect, but in the trusts that i create, i always give the beneficiary control over firing and hiring of trustees.

 

[TrustUser]

taxing matters has not yet chimed in. hopefully he will have something positive to add to the discussion, giving you an option that might give you some sort of control over the situation.

 

[Krinkov58]

I have no say in anything. Let's put it this way...the last time I messaged the trustee in March it took him a week to get back to me, and the only reason he did was because I contacted somebody at another branch who looked online and saw that he had logged into the bank's system within the last few minutes, and who messaged him for me. I sent both the trustee and his secretary an email on the 21st and nobody has replied yet so I sent another email this afternoon. They just ignore me at this point so I rarely even bother contacting them.

 

[TrustUser]

i realize that you think you have no say, and that may be true. but someone with a lot of experience in something may be able to come up with something of which the both of us are unaware. in other words, one never knows what he doesnt know !!

 

[zddoodah]

I am the sole living beneficiary of a trust, established by my father, which is being held and administered by a well-known bank.

So...the bank (or some bank employee) is the trustee?

So what is the bank doing with this money, anyways?

I don't really understand this question or why you'd think anyone here would know the answer to it. You told us the bank is investing some or all of it, and we don't have any information beyond what you tell us (except that, obviously, the bank "is doing" the same thing with money that isn't being invested as it does with any other money entrusted to it).

I've noticed sometimes large amounts of money disappearing...for example, over $200,000 disappeared between the 3rd and 4th quarter in 2018 and more recently, over $300,000 was lost between the 4th quarter of 2019 and the 1st quarter of 2020. This bank routinely pays out more in fees and miscellaneous disbursements that it pays out to me...honestly, since 2015 it seems as if this bank spends more and more of it's time trying to come up with ways to evade the execution of the trust than actually executing the trust itself. It's gotten to the point where I only contact the trust manager maybe 2 or 3 times annually because it is such an unpleasant experience, and even then it can take a week for a response (or sometimes there will be no response at all). Is this a common thing when dealing with banks that are handling a trust fund?

I'm not sure what "this" refers to. Is it "common" for money to disappear? Of course not. Is it "common" for a trustee of a trust to be entitled to payment for services? Absolutely. Is it "common" for the trustee's fee to exceed distributions to beneficiaries? I would say it's neither "common" nor "uncommon." The amount of trustee fees and distributions depends entirely on the terms of the trust.

Bottom line: If you don't like the job that the trustee is doing, you're free to file a legal action to seek to have the trustee removed and maybe even surcharged.

 

[TrustUser]

do you have a copy of the trust document ? any decent trust document spells out how a trustee is hired and fired. i would be interested to see exactly what your document says, regarding this.

but there is a lot of money in your trust, and it seems to me a lot being taken out. i would take z's advice, and at least talk to someone about what is involved in filing a legal action to have the trustee removed. what sorts of chances of success do you have ?, etc. it would be money well spent

 

[Krinkov58]

zddoodah...okay, your answers seem rather obtuse. Yes, an employee of the bank acts as trustee although there is a trust committee which meets to decide on approvals of discretionary disbursements to beneficiaries. Of course I'm not asking exactly what stocks/bonds/funds the bank is purchasing and selling; as I've said I do get quarterly reports detailing all of the transactions for that specific time period. If the language I am using leads you to believe that I'm cognitively impaired to the extent that I would actually take the time to post a question asking total strangers on the internet what my own specific investments are, then I apologize. I thought I had covered this in my forth post on this thread...what I am asking is, is the bank allowed to make money off of the trust's money over and above what they are charging in fees which in this instance is about $20K annually. Because I am seeing no real growth at all over the last 6 years in the actual market value of the trust despite many, many transactions quarterly. What the trustee disburses to me monthly is not even one quarter of one single percentage of the trust's market value, about 000.22%, and therefore in my opinion does not represent any significant drain on the balance of the trust's funds. Unfortunately the terms of the trust, aside from a set of conditions which I must follow and which the bank has never disputed that I follow, are somewhat vague and only indicate that the trustee is to pay the beneficiary, which is me, "so much of the income and so much of the principle as the Trustee deems appropriate".

TrustUser, the trust only provides guidance in the event of a recusal. There is no specific wording relative to replacing a Trustee. But one thing the trust does mention is that, if the Trustee wishes, an opinion regarding what is or is not appropriate can electively be solicited from the attorney who created the trust and who was my father's personal attorney...who unfortunately has passed away. But I recently got in touch with one of his co-partners from his firm who is going to search his records for any documentation which could speak to the material purpose of the trust, which I think is kind of in question here.

 

[Krinkov58]

By the way...does anybody know of any case law (Massachusetts or federal) they can point me to regarding: a) trusts that pay a living beneficiary for their lifetime, and upon their death the remaining trust assets are given to an organization, school, charity, etc... I'm just curious as to what legal obligations a Trustee might have to sequent beneficiaries....and b) what factors are even legally considered when trying to determine material purpose of a trust. I can't find much via Google.

 

[Zigner]

By the way...does anybody know of any case law (Massachusetts or federal) they can point me to regarding: a) trusts that pay a living beneficiary for their lifetime, and upon their death the remaining trust assets are given to an organization, school, charity, etc... I'm just curious as to what legal obligations a Trustee might have to sequent beneficiaries....and b) what factors are even legally considered when trying to determine material purpose of a trust. I can't find much via Google.

It would REALLY be worth your while to speak to an attorney. This is not a do-it-yourself project.

 

[Krinkov58]

It would REALLY be worth your while to speak to an attorney. This is not a do-it-yourself project.

I spoke with a law firm yesterday. I agree.

 

[zddoodah]

.what I am asking is, is the bank allowed to make money off of the trust's money over and above what they are charging in fees which in this instance is about $20K annually.

The trustee of a trust is entitled to whatever the trust instrument (or, if it is a court-supervised trust, the court) says.

You seem to be looking for the anonymous strangers who post here to render opinions about the conduct of the trustee when we only have your one-sided summary and haven't even seen the trust instrument. That sort of evaluation isn't something anyone here can give you (at least not intelligently). You'll need to have a local attorney review everything and advise you.