The amounts being held in personal trusts are at the highest marks since the recession.
The personal trust market is consolidating among the largest banks, according to data compiled from the FDIC for Spectrem’s 2014 Personal Trust Update.
The update shows that the top 10 banks now hold 60 percent of the personal trust accounts, equaling $569 billion in assets. The amounts in managed personal accounts are at the highest mark since the recession, and the total assets in non-managed accounts continues to move up, although not yet returned to its 2008 level.
An analysis of FDIC information shows that almost $583 billion in assets are invested in individual and common stock (when the trust is given the discretionary authority to invest for the client). Equity mutual funds saw $300 billion invested in 2013, and more than $248 billion went to other mutual funds.
More than $173 billion in assets were invested into municipal, county and state obligations, and $80 billion went into money market mutual funds. Seventy-three billion was invested in private equity and unregistered funds.
Spectrem examines investment structures by Ultra High Net Worth investors, with a net worth between $5 million and $25 million, and the $25 Million Plus investors. Of those groups, 43 percent of UHNW investors have assets in the legal structure of a trust, and 58 percent of the $25 Million Plus investors do so.
Fourteen percent of the $25 million Plus use the financial institutions in the role of trustee, and 12 percent of the UHNW investors do so.
There are 614,000 trust accounts being held in 1,397 reporting institutions. While assets are climbing, the number of trust accounts is dropping, a fact Spectrem calls to attention in its summary of the report.
“Focus on using trusts for protecting assets and providing clarity around asset distribution within a family,’’ Spectrem writes in its advice to banks and lending institutions. “At a time when many individuals are uncertain about the ramifications of any tax law and healthcare changes on their own situations, it is important to demonstrate the importance of your services. Build relationships with local attorneys to highlight the expertise of both entities.”
Kent McDill is a staff writer for Millionaire Corner. McDill spent 30 years as a sports writer, working for United Press International and the Daily Herald of Arlington Heights, Ill. From 1988-1999, he covered the Chicago Bulls for the Daily Herald, traveling with them every day through the nine-month season. He also covered the Bulls for UPI from 1985-88, and currently covers the team for www.nba.com. He has written two books on the Bulls, including the new title “100 Things Bulls Fans Should Know And Do Before They Die’, published by Triumph Books. In August 2013, his new book “100 Things Bears Fans Should Know And Do Before They Die” gets published.
In 2008, he resigned from the Herald and became a freelance writer. The Herald hired him to write business features and speeches for the Daily Herald Business Conferences and Awards presentations.
McDill also writes a monthly parenting column for the Herald’s Suburban Parent magazine.
McDill is the father of four children, and an active fan of soccer, Jimmy Buffett and all things Disney.