What Is a Trust Advisor?

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As the process of creating and managing a trust fund is intrinsically complex and sensitive, it is important to employ someone as skilled and trustworthy as an advisor. Professional trust advisors help clients to set up trust funds and manage them so that they result in the highest possible benefits.

Trust Fund

A trust fund is a legal entity that acts as a transitional structure to convey wealth from a donor to a beneficiary. Such entities are most useful for adults who wish to give their wealth to children, but they also can be used as a personal savings method to prepare for periods of unemployment and lack of income. A trust fund involves a trustee who, usually for a fee, helps to manage the trust fund, in some cases even deciding how the fund will invest its money to generate more income in the future. This trustee is often a professional trust advisor.

Certification

In the United States, the certification for a professional trust advisor is called the Certified Trust and Financial Advisor (CTFA). Holders of this certification must pass an examination that tests their knowledge regarding trusts and fiduciary responsibilities along with their knowledge of investment practices, general financial planning, economics and taxation. It may be advisable to only seek the help of a professional trust advisor who has the proper certification, but it is not absolutely necessary.

Services

A certified trust advisor may work for a firm that specializes in administering trust funds, or he may work alone as an independent trust advisor. Either way, a trust advisor helps the donor and beneficiary by managing the investment of the fund's assets and ensuring that the rules stipulated for the fund are followed. For example, the donor may decide that the beneficiary cannot gain full access to the trust fund until she turns 18 years of age or graduates from college. In this case, the trust advisor, acting as trustee, will see that the donor's wishes are honored.

Issues

Some donors prefer naming a friend or family member as trustee rather than a certified trust advisor because they feel the need to put the fund in the hands of someone they can trust. This occurs largely out of fears of conflicting interests. For example, a potential client might fear that a trust advisor, acting as a professional trustee, may engage in business practices that compromise the stability of the fund, such as loaning money to himself from the fund or selling his own property to the fund. However, such practices are very unprofessional, and legitimate trust advisors usually do not compromise their professional position by engaging in these acts.

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