settlement trusts by christi fried continental trust srvcs llc
DESCRIPTION
Laddered Bond PortfolioTRANSCRIPT
2010 Settlement Professionals Inc.
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Continental Trust Services, LLC
Settlement Trusts are an excellent option used in conjunction with a structured settlement annuity to provide access to funds for unexpected changes in the future
The structured settlement annuity provides the advantages of rated ages and longevity for the life of the plaintiff
Many vendors offer Settlement Trusts with options to create a unique settlement for the needs of each individual family
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Professional Trustee Accounting and preparation of income tax
returns Fiduciary responsibilities Spendthrift protection
Disbursements Replicate period certain and lump sum payments Discretionary access to funds Assets held in separate accounts
Define Investment Instructions
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Continental Trust Services, LLC
Duty to administer Trust by its terms Duty to account and furnish information Duty of confidentiality Duty of loyalty Duty of impartiality Duty to avoid conflicts of interest Duty to protect against adverse trust appointments Duty to control and preserve trust property Duty to make property productive Duty to keep trust property separate Duty of delegation Duty of Trustee’s special skills
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Good communication, accounting, organization and detective skills
Attention to detail Understanding of legal, tax, insurance
and investment issues Good health administration Effective coordination
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Define Trust Property Investment Instructions
Assets are held by a Custodian (bank or other entity chartered to accept deposits)
Investment advisors are licensed to trade bonds
Treasury bonds are backed by the full faith and credit of the United States government
Municipal bonds chosen are investment grade, non-callable and insured by a monoline insurer
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Continental Trust Services, LLC
Guarantees the payment of principal and interest on a bond if the issuer defaults
Purchased through a onetime payment of a premium at the time of the bond closing
The process begins with the issuer submitting documentation for review Official statement Financial statement Bond documents
If the issue qualifies then, the policy may be purchased by direct purchase or elective bidding
Direct purchase – issuer purchases the insurance policy directly from an insurer Elective bidding – each bond dealer assesses whether insurance will enhance the bond
then, the bond dealer pays for the insurance policy
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MONOLINE INSURANCE COMPANIES
AMBAC Assurance Corporation Financial Guaranty Insurance Company (FGIC)
Assured Guaranty Corp. (AGC) National Public Finance Guaranty Corp. (MBIA)
Assured Guaranty Municipal Corp. (FSA) Syncora Guarantee
CIFG Assurance North America, Inc. Berkshire Hathaway Insurance
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Assets are kept separate and are uniquely identified by individual tax identification numbers
Executed trust document is required Investment profile defines that
investments are limited as defined in the trust document
Review of each distribution request prior to releasing funds
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Member of Securities Investor Protection Corporation (SIPC) Replacement of missing securities and
cash up to $500,000 Limit of $100,000 for cash
Account protection in excess of SIPC limits from Lloyd’s of London
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Is the payment listed on the distribution schedule pre-tax?
What accommodations can be made via language in the trust to plan for college or if the child does not go?
Will the payment listed in the quote be the payment mailed to the beneficiary if no other changes are made during the life of the trust?
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Discretionary If the Beneficiary requires funds early is
this possible? How will that change the distribution
payment? Disbursements are made directly to the
Beneficiary from the Custodian Will Continental Trust do a conference
call with the family to help plan the flexibility of the trust?
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Trustee fees Settlement consultant referral fee Other (accountant, attorney, investment
advisor, fidelity bond, etc.) Is the quote net fees? What are the fees? Can the fees be disclosed to the court? How does the obtaining of the bond work
if the court requires a bond?
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Grantor Plaintiff Defendant Court
Trustee Invest assets within the investment instructions Perform administrative services Compensate others such as; attorneys, investment advisors,
brokers Pay taxes and provide loans to the beneficiary
Are the taxes and tax filing fees paid from the trust? When are the taxes due on the trust? Can you provide a letter estimating taxes?
Select Custodian of the assets
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Beneficiary Plaintiff Family Members
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Intentionally Defective Grantor Trust provides that the income of the Trust is taxed to the Grantor and the assets of the Trust are distributed to the Beneficiary
A contractual arrangement whereby property is transferred from the Grantor to the Trustee to hold the property for the benefit of the Beneficiary
Type of Trust that cannot be annulled, changed, or terminated by the Grantor
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Continental Trust Services, LLC
01/25/2010Continental Trust Services, LLC
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111 Beach Street, Suite 3DBoston, MA 02111www.continental-trust.com