What Is a Trust Advisor?

The process of creating and managing a trust fund is intrinsically complex and sensitive, so it's important to employ someone skilled and trustworthy as an advisor. Professional trust advisors help clients set up trust funds and manage them so that they result in the highest possible benefits. Reviewing the basics of these jobs will help you make the right choice for your personal situation.

A trust fund is a legal entity that acts as a transitional structure to convey wealth from a donor (known as the grantor) to one or more beneficiaries. This differs from the trust entity itself, which is the agreement created to specify how the assets will be distributed, according to Trust and Will.

Trust funds are most useful for adults who want to pass their wealth to children, but they can also be used as a personal savings method to prepare for periods of unemployment or other lack of income. A trust fund involves a trustee who manages the trust fund, usually for a fee. In some cases, the trustee may even decide how the fund will invest its money to generate more income in the future. This trustee is often a professional trust advisor.

The certification for a professional trust advisor is called the Certified Trust and Financial Advisor in the United States. 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 seek the help of a professional trust advisor who has the proper certification, but it's not absolutely necessary.

A certified trust advisor may work for a firm that specializes in administering trust funds, or they may work as an independent trust advisor. Either way, a trust advisor helps the donor and beneficiaries by managing the investment of the fund's assets and ensuring that the rules stipulated for the fund are followed.

This is especially important if you're not sure if you can distribute assets early or not, based on whether the trust is revocable or irrevocable. For example, the creator of the trust (the person who originally gives the money to and funds the trust) might decide that a beneficiary cannot gain full access to the trust fund until they turn 18 years of age or graduate from college. The trust advisor, acting as trustee, will see that the donor's wishes are honored in this case.

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're sure 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. This might involve loaning money to themselves from the fund or selling their own property to the fund.

Such practices are very unprofessional, and legitimate trust advisors won't compromise their professional positions by engaging in these acts. Look to see if a trust advisor you're thinking of hiring belongs to an organization with a code of ethics, or if they have a values statement on their website. You should also determine any fees that will be involved upfront. These are often a percentage of the money that's under management.