Trust & Estate Accounts
Accounts run by a fiduciary - a trustee or an executor - under a governing document.
What is Trust & Estate Accounts?
A trust account is opened by the trustee, who must follow the trust agreement and act prudently for the beneficiaries; revocable trusts can be changed by the grantor, irrevocable trusts generally cannot, and assets in an irrevocable trust are usually removed from the grantor's estate. An estate account is opened by the executor (or estate administrator), who needs the death certificate and letters testamentary. Trusts reach the top income tax bracket at a very low income level, which pushes trustees toward tax-efficient holdings.
Trust & Estate Accounts: a worked example
An executor opens an estate account to collect the decedent's dividends while probate proceeds.
More terms in Clients, Strategy & Tax
Sole Proprietorship
A business owned by one person with no legal separation from the owner.
General Partnership
Co-owners share management and unlimited liability; income passes through.
Limited Liability Company (LLC)
Limited liability for owners with pass-through taxation by default.
C Corporation
A separate taxpayer - profits taxed at the corporate level, then again as dividends.
S Corporation
A corporation that passes income through to shareholders, avoiding double tax.
Foundations & Charities
Tax-exempt organizations investing for a mission, often in perpetuity.
Client Profile & Data Gathering
The financial and nonfinancial facts every recommendation must rest on.
Investment Objectives
Preservation of capital, income, growth, growth and income, speculation.