Can a Trust Hold Funds in a Low-Cost Investment Account in Order to Reduce Costs?
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Question:
My siblings have an irrevocable trust with a few million dollars in stock assets. Is there a place to avoid the fee of parking the assets outside of a trust manager? We don’t want to sell any assets in the trust, just distribute dividends and the stocks themselves over the next few years. We have trustees who work with us and allow for distributions. Is there a place to park the assets cheaper than the “standard” 1/2 percent? E.g. Charles Schwab, Fidelity, etc?
Response:
You use the term “trust manager” as opposed to “trustee” or “investment manager.” I’m going to assume, since you say the trust does have separate trustees, that you mean investment manager. Yes, the trustees can choose to hold the investments at a low-cost brokerage firm. However, many trustees don’t feel comfortable being responsible for investments, so they hire outside advisors or managers for this purpose. It sounds like that is what your trustees have done. They don’t have to do so, but if they are professional trustees, whether they will do anything differently could depend on their firm policies. They may want releases from the beneficiaries for taking another course.
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