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Unbundling Trust Fees -
What It Could Mean for Your Clients
This podcast was recorded Oct. 15, 2008Designed and controlled by Trusts & Estates magazine.
It looks like banks are going to be forced to unbundle the fees they charge trust clients for investment management from the fees they charge for administration. At least, that's essentially what's been considered by the Internal Revenue Service in the proposed regulations on Internal Revenue Code Section 67(e) that were issued in July of 2007.
But what does "unbundling of fees" mean? And what impact, if any, will it have on your clients?
OR 
Listen using Windows Media Player or download the entire .mp3 file (24MB).
This podcast features three experts to help us really understand - and prepare for this potential change.
Acting as moderator for this discussion-and representing small firm wealth management attorneys everywhere - is Louis A. Harrison.
Lou is a partner at a firm he created, Harrison & Held, in Chicago. His practice focuses on estate planning and litigation, post-mortem tax planning, charitable dispositions, and gifting strategies. Lou is a member of ACTEC and a frequent speaker and writer on tax and estate planning. Before Harrison & Held, he was the partner in charge of the Lord, Bissell & Brook Wealth Preservation Group. He has his MBA with honors from the University of Chicago, his law degree with high honors from Duke University. He graduated Colgate University in 1981 magna cum laude. 
Barbara A. Sloan had principal responsibility for preparing ACTEC's comments that were submitted to the IRS. That's the American College of Trust and Estate Counsel, which essentially told the Service: "Go ahead and require unbundling." Barbara graduated from the George Washington University in 1972 and received a master's degree in psychology from the University of Maryland in 1974. After pursuing a career in psychology, she graduated with honors from the Washington College of Law of American University in 1988. Barbara practiced law in DC, then moved her practice to New York, joining McLaughlin & Stern in 2000. Her practice relates principally to estate planning, the administration of estates and trusts, trustee and beneficiary litigation, business succession planning and tax-exempt organization work, focusing particularly on private foundations and public charities.
Phoebe Papageorgiou speaks for the American Bankers Association, which submitted comments arguing that the proposed rule would impose significant and costly fiduciary and administrative burdens on bank trust departments-for little benefit. Phoebe is senior counsel for the ABA's Center for Securities, Trust & Investments. She covers regulatory and legislative developments of interest to trust bankers. She manages the advocacy efforts of ABA's Trust Taxation Committee, following such issues as the tax deductibility of trustee fees, the reporting of cost basis in securities, and estate taxation. Before joining ABA, Phoebe worked for the U.S. Department of the Treasury in the Office of Domestic Finance. She received her law degree from the George Washington University Law School and her undergraduate degree from Carnegie Mellon University.Below, you’ll find links to Trusts & Estates’ articles on unbundling. You’ll also find links to comments to the IRS by ACTEC and the American Bankers Association, as well as ABA briefings on the issue.
OR Listen using Windows Media Player or download the entire .mp3 file (24MB).
Trusts & Estates articles: note that these articles on trustsandestates.com require an active subscription and login. To purchase a subscription to Trusts & Estates, click here.
• Kevin Matz, "Practitioners Weigh In On 2 Percent Floor Debate," July 2008, p. 40.
• Kevin Matz, "Knight's Decided, Now What?" March 2008, p. 62.
• Gail E. Cohen, "Hope," January 2008, p. 22.
• John M. Janiga, "Pepperidge Farm Legacy," September 2007, p. 20.
• John M. Janiga and Louis S. Harrison, "Deducting Fees for Investment Advisory Service," April 2007, p. 42.
Additional Resources:
The ACTEC comments
American Banker's Association Telephone Briefing on the IRS proposed rule.
Phoebe Papageorgou's May 2008 comment letter to the IRS (PDF).
Note from the Editor
Trusts & Estates is the town center where experts who serve the planning needs of the ultra-wealthy gather to gain insight into their specialties and to learn about related professions. Community members include estate-planning lawyers, corporate and individual trustees, financial planners, accountants, investment advisors, charitable giving specialists, family office executives, insurance agents, valuation experts and the like....More about us
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