What is the process for opening an account?
A trust officer must review the trust documents and other associated documents, prior to proposing fees and accepting a new trust. Once the trust document has been reviewed, the trust officer will communicate with the client or attorney on whether we can accept, and if so, what fees would apply. After acceptance of the quoted fees, and receipt of all necessary Peak Trust Company documents (NAOF, etc.) and trust document (adequate indemnification, understanding of intent, etc.), Peak Trust Company will execute the trust document and assume the appropriate role. Peak Trust Company will work with the client or advisor to transfer trust assets into Peak Trust Company custody as applicable.
What is the process for requesting (discretionary) distributions?
Requests for discretionary distributions must be made in writing (email is sufficient). The request doesn’t need to long, but should include any and all supporting documentation and most importantly, rationale for why the distribution should be considered. Essentially, the request should describe why the distribution makes sense, in accordance with the terms of the trust.
If the beneficiary lives in another state, in what state is state income tax applied?
If it is a “grantor trust” for income tax purposes, the beneficiary will not have any tax liability.
If a “non-grantor trust,” the beneficiary may be taxed on distributions from the trust.
The tax liability for distributions will be calculated based on the beneficiary’s state of residence. A beneficiary will receive a K1 for any year in which they receive trust distributions. The K1 will show the calculations for what must be included on the beneficiary’s personal tax return. State tax will apply based on the beneficiary’s state of residence.
Trust taxation is a complicated matter and should be discussed with a seasoned tax advisor for the correct answer for each individual situation.
What is the process for directing investments?
The trust document will outline what is required to invest trust assets, who is responsible, and any applicable restrictions.
For a directed trust, the party with investment authority must give Peak Trust Company investment direction in writing for any trust assets.
If Peak Trust Company has investment authority, Peak Trust Company will make investment decisions based on the terms of the trust document and facts and circumstances of the relationship, e.g., type of assets, beneficiary needs, etc.