By Whittier Trust 

Who doesn’t love baseball, aptly called “The Great American Pastime”? The best games take the fans, players and coaches on a nine-inning journey with highs and lows, demonstrations of strength and strategy, and ultimately, a celebration of the winning team’s victory. 

Whittier Trust Company Assistant Vice President and Client Advisor Austin Barr— a recently converted Angels fan since moving to Newport Beach—sees the game as an apt analogy for the service Whittier Trust provides. “Our founder, Max Whittier, made his own luck when he made the cross-country trip from Maine to California—and we seek to perpetuate that winning streak with our preparation and expertise,” he says. Here’s how. 

Team Effort

The best teams have a well-rounded collection of players who are skilled and specialized for the best team outcome. “The baseball analogy rings true: we play a lot of positions and must be ready for every hit,” Barr says. That can include everything from strategic services such as estate planning to maximize intergenerational wealth and looking for new advantageous alternative investment vehicles to tactical services such as ensuring business continuity or mitigating potential tension between beneficiaries. 

Because Whittier Trust has five distinct but connected divisions—Investments, Trust Services, Family Office, Philanthropy and Real Estate & Energy—their bench is deep and diverse, which provides a holistic and methodical approach to a client’s financial landscape and life overall. For example, some clients come to Whittier for investments and then discover that working with the philanthropic services division can decrease their tax burden to increase their portfolio’s overall value. “It's really white glove service to the extreme,” Barr says. 

Personalized Playbook

As any coach knows, every team and opponent is different, so the best coaches develop a playbook that’s tailored for the season and flexible enough to win the game at hand. Similarly, when Whittier Trust begins working with a new client or family, they spend ample time getting to know the client, asking questions about lifestyle, goals, interests, concerns and much more. As a result, the day-to-day “playbook” may look slightly different for each client and it may change over time, as the client’s needs and goals change—or as life throws curve balls. Whittier Trust takes a nuanced approach and is able to be agile and thoughtful to give the client the best outcome and provide the most comfort along the way. 

Barr notes, “We are actively looking for opportunities to optimize by revisiting goals and priorities regularly.” That could mean proposing an advantageous investment to minimize tax burden, celebrating a new addition to a family by setting up a college investment account or connecting with the philanthropic services team to pursue a client’s charitable passions. No request is too big or too small. 

Prepared for Curveballs

Anyone who has lived through the last few years knows a thing or two about curveballs—thanks to a global pandemic, supply chain delays, a war in Ukraine and the “Great Resignation” that precipitated challenges in staffing. However, a well-rounded team is agile enough to expect that curveballs (or fastballs or changeups for that matter) are going to come, so that none of those events trigger knee-jerk reactions or panic-driven decisions. Instead, Whittier Trust takes a measured, thoughtful approach to whatever the market or the world throws at them. “It’s not a reactive type of thinking. Instead, we thrive in complexity,” says Barr. “Whether it’s the sale of a business and the pre-sale and post-sale planning or looking for opportunities to both preserve and grow wealth, we find a plan and strategy to do what’s right for our clients and their goals.” 

For the Win

No matter what a client’s specific needs are, the Whittier Trust team’s goal is the same: to create a winning strategy. The low client-to-advisor ratio allows them to create and execute a highly customized plan, to be constantly available for questions and to proactively reach out as new opportunities arise. “Our winning strategy is made up of excellent service and ensuring that wealth is preserved over the long term,” Barr says. “We exist to grow and preserve the wealth of our clients, so that their legacy lives on.”

By Whittier Trust

Philanthropy is about helping others, offering invaluable funding to support communities and causes. When family foundations are involved, it gets more complex than simply giving money away. It’s also about preserving a legacy and bringing family members together in the name of a shared cause or purpose. The style and look of a family foundation has evolved, and it’s important to consider how to engage the next generation.

Junior boards—also called associate boards—can be a powerful philanthropy services tool in helping prime the next generation, and they can be highly personalized in structure, style and purpose. They can be as small as four members, or as large as 20, and the age limitations can be anywhere from pre-teen to mid-30s. These launch pads are instrumental in not only growing the foundation’s reach but also growing the junior board members as individuals.

“Junior boards help teach the next generation about the foundation and its mission, how it’s structured and more. It’s a good way to strengthen members’ financial literacy skills. It helps them learn about the value of money, investing the foundation’s assets, learning about the stock market and the power of leaving your money invested so it grows over time,” says Alexandra C. Repko, officer and client advisor for Whittier Trust’s Philanthropic Services. Junior boards can also help strengthen familial ties, prepare members to transition to the main board and help members discover more about themselves. Here’s how.

Strengthening Family Bonds

Junior boards can help strengthen a family’s bond, especially if there are many branches or if the members aren’t particularly physically or emotionally close. “It’s a good way for cousins or more distant relatives to be able to collaborate and decide how and where the money should go,” says Repko, who adds that working together is helpful in making junior board members feel less alone in their giving.

Even close-knit junior boards can deepen their relationship. She recalls one example of a small but well-run junior board that had been working together for many years. Whittier Trust facilitated a connection presentation for them to share during a family retreat, where each member worked with the firm to share more about their choice of organization to support.

“We created a presentation for them to give to each other on the junior board and the greater family. It was during the pandemic so it was over Zoom, but it worked really well. They were able to share with each other, to present their interests and why they chose to give to particular organizations,” she says, noting that the environment made it conducive for creating deeper connections.

“Sometimes, even though you’re family, you don’t always take the time to listen and hear about each other’s interests,” she says. “It strengthened family ties in a natural, organic way.”

Facilitating Family Continuity

Succession is a challenge family foundations often face, so establishing a well-functioning junior board can help smooth the transition to the main board. “Junior boards can promote family continuity,” explains Repko.

It also helps get family members invested earlier, which can also be its own challenge, depending on the level of excitement a junior board member has for the role. That’s where Whittier Trust comes in. “Part of our role is to get the junior board excited,” says Repko, whose team does this by showing interest in junior members as individuals, having strategic conversations and doing site visits to grantees so they can see first-hand the impact they’re having.

Conversely, some junior board members are exuberant and need help focusing their interests and refining their strategies. Whittier Trust steps in and supports them by guiding them through questions to help figure out values to create a common purpose.

Repko recalls one junior board of preteens who were so excited to be participating, but they hadn’t yet identified a mission. Whittier Trust got them together and used a core values game to help. “We identified not only the family’s core values, but their individual values as well,” she says. “When they’re really enthusiastic it’s easier for them to inspire their cousins and other family members.” Getting them involved in the process in the right way at the right time can help fuel a lifelong passion for the family foundation. It can be particularly special to have a junior board because many will have parents on the main board, providing opportunities for bonding and working together.

Inspiring Personal Growth

Repko’s favorite aspect of her job is watching junior board members grow. “They’re able to find out more about themselves and their core values. It’s one of the most beautiful parts—sometimes they think they’re just supporting a charity in their community, but they eventually realize that they have a passion for the environment, or helping women or underserved kids, for example,” she says. “They walk away with a better idea of who they are and what they want to do to make a positive impact in the world. They learn that grantmaking isn’t just a transaction—ideally, it’s a relationship.” The impact of personal growth on a family foundation, especially as it concerns giving, is immeasurable.

Whittier Trust helps create, manage and evolve junior boards, tailoring their recommendations and plans to a family’s philanthropic mission and grantmaking style, while simultaneously helping them find their own philanthropic voice.  “As the next generation moves up, there will be new trends. Junior boards today have different interests compared to their grandparents. And we’re able to welcome and support their new ideas,” says Repko.

By Robert LeBeau

Nevada may be known for its gold rush history, glamorous casinos and high-stakes poker games, but high-net-worth families learn that it’s no gamble to keep their money there. “Nevada is one of the most trust-friendly states. It’s a terrific alternative to placing your money offshore,” says Robert C. LeBeau, a senior vice president and client advisor with The Whittier Trust Company of Nevada, Inc. based in Reno.

Starting in the 1990s Nevada’s leaders watched other states, such as Delaware and South Dakota, amend their laws related to trusts to attract money from high-net-worth individuals. State leaders knew that becoming trust-friendly would help grow the economy. 

Taking those strategic steps has paid off. LeBeau notes that more and more of Whittier Trust’s high-net-worth clients, with their interest in wealth planning—particularly in efficiently passing wealth from one generation to another—have recognized that Nevada can offer both flexibility to achieve their goals and significant tax savings. “We have clients in more than 30 states who are able to set up a Nevada trust by having Whittier Trust as a trustee,” LeBeau says.

Here are three key things that establishing a Nevada-based trust can do for your family.

1. Boost Wealth

Nevada’s laws support wealth maximization for future generations through beneficial tax policies, as The Silver State imposes no income tax, transfer tax or estate tax.

Nevada also allows for what is often referred to as a “dynasty trust,” which provides for a term of as long as 365 years. By contrast, in neighboring California, a trust can last for less than a third of that time.

One family that works with Whittier Trust held multiple long-term trusts in an East Coast state. LeBeau says that transferring those trusts to Nevada let the family avoid state inheritance and income taxes.

2. Shield Assets

“Nevada has a host of forward-thinking laws regarding asset protection that many other states don’t have,” says LeBeau. “Those thoughtful, friendly laws make Nevada a great alternative to establishing a trust offshore in the Cayman Islands and other jurisdictions.” For example, Nevada law provides for asset-protection trusts, known as self-settled spendthrift trusts, that prevent most creditors from attaching trust assets and compelling distributions.

“We’ve had non-Nevada resident clients work with us to establish Nevada asset protection trusts to protect a substantial portion of their wealth from potential future creditors and ensure they have a safety net fund,” LeBeau says. 

3. Stay Flexible 

One of the most powerful advantages of Nevada’s laws is their flexibility as it applies to drafting new documents, amending existing documents and managing investments. “Circumstances can change,” says LeBeau. “In a lot of states, once a trust is in place it’s considered ‘irrevocable,’ making it hard to modify, no matter the reasons a change is warranted.”

Nevada is unique from other states, such as California, because it has statutes that provide for a “trust protector,” a role that either an individual or a trust company like Whittier Trust can fill. “A trust protector can modify an irrevocable trust agreement,” LeBeau explains. “They’ll often do this to respond to changes in law or otherwise to direct action that would be in the best interest of beneficiaries.” The provision for a trust protector is a distinct asset of doing business in Nevada.  

Developing Your Family’s Assets In Nevada

Residents of any state can set up accounts in Nevada to benefit from the state’s wealth-friendly legislation. Here are just some of the options: 

1. Decant a Trust

Many clients come to Whittier Trust with trusts established in other states that they want to decant to Nevada—that is, redistribute assets from a trust elsewhere to a new one in Nevada, on better terms. The Silver State boasts some of the best decanting statutes in the country.

“Nevada continues to enhance its decanting statute to allow for even greater flexibility,” says LeBeau. “A lot of states have decanting statutes, but they vary in terms of what is allowed.  Nevada allows for changes that some of the other jurisdictions do not.”

For example, a married couple with adult children recently came to Whittier for help with trusts established in another state. “As we do with all of our clients, we spent time doing a deep dive to get to know the family and understand their life balance sheet, estate plan and goals,” he says. The family succeeded in decanting those trusts into new Nevada trusts with improved terms that boosted flexibility and satisfied the family’s goals.

2. Implement a Directed Trust

Other clients, often business owners or families with concentrated positions in real estate or a particular security, take advantage of Nevada’s directed trust laws. “Clients may want to be involved in investment decisions, or they may want another trusted advisor or family member who makes decisions about distributions [involved],” LeBeau says. “A directed trust allows for that flexibility. That way clients can maintain some of that control, but they’re able to employ a very favorable trust structure.”

3. Execute a Dynasty Trust

“Many clients come to us looking to build their legacy and maximize wealth for the next generation,” says LeBeau. “We often work with their CPAs, attorneys and other advisors to plan how to structure the estate plan.”

For some families, that means creating a Nevada dynasty trust funded with closely-held stock from the client’s company. “That creates the ability to pass on large amounts of wealth free of state income taxes and Federal estate taxes,” he says. 

Regardless of where you live, aspects of Nevada law can benefit your high-net-worth family now and for generations to come—all without the potential complications of heading offshore.

Thomas J. Frank, Jr

As some of my colleagues know, I am a late-middle age endurance athlete – I compete in triathlons. Recently, on one of my longer training runs, I was thinking that the same qualities required for a triathlon are found in estate planning – particularly, inter-generational wealth transfers. Think of it this way, both endeavors require a good plan. At the beginning of my training season, I plan out various goals to hit prior to race day. Similarly, a good wealth transfer plan starts with a plan for how much the donors want to transfer, to whom and thoughts about time frames.

The second critical component of a successful race is good coaching. The results of my attempts at DIY coaching were not very satisfying. In response, I hired a sport-specific coach and a nutritionist who specializes in working with endurance athletes. The same is true with inter-generational wealth transfers. While it’s easy enough to make cash gifts each year to children and grandchildren, a more thoughtful approach that includes a good lawyer and accountant has a higher likelihood of positive outcomes.

Third, adjustments are ongoing. I know that for as long as I have the health and interest in pursuing triathlons, changes will be required and experimentation is encouraged. These may mean a switch-up in workouts, equipment or fueling. Similarly, with long-term estate planning, little experiments along the way may be helpful. Let’s say a family is interested in philanthropy. Before taking the leap of establishing a private foundation, they may want to “test drive” formal philanthropy by setting up a small donor advised fund. They may find that the donor advised fund is perfect for them. Or they may decide that a private foundation would be a better vehicle to achieve their goals.

In my sport, the selection of races is important to success. I had to compete at a few different distances to determine what kinds of races I wanted to pursue. Location is also important since I am fortunate enough to train in the Bay Area where I am close to sea level and the climate is temperate. In estate planning, families should think about how they want to set up gifts to younger generations. Are long-term trusts the right approach or is something shorter term a better option? Tax laws and trust rules are frequently in flux and family situations are always changing and the solutions will change in response. Flexibility is key.

Finally, what does “success” mean? For me as an aging triathlete, it is unlikely that I will end up on a winner’s podium. I’ve decided that the ability to participate at a reasonably competitive level while remaining healthy and still having time for friends and family is the most important measure of success. In the estate planning context, it may not be about avoiding taxes at all costs. Rather, it may be providing a safety net for future generations while at the same time allowing family members to support causes that are important to them. This could translate into a focus on providing funds for education and entrepreneurial efforts and then giving away the balance to charity.

In estate planning and inter-generational wealth transfer, there is no right or wrong answer when it comes to success and the results. The formula for a winning strategy is the development of a plan, the addition of the right advisors, the flexibility to adapt to changing situations and a clear understanding of the goal.

Tom Frank is a Client Advisor and the Northern California Regional Manager. He regularly competes in Olympic distance and Ironman 70.3 triathlons throughout California.

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An image of a silver and gold ring intertwined together.

The beginning of a new decade is one of those personal milestones that often prompts reflection and introspection. Where am I in life’s journey? How do I feel about the decade that just ended? What lies ahead?

Investors are no different and may have posed the same questions about the financial markets at the end of last year. Their review of the past decade was quite likely positive and upbeat. Stocks and bonds both had a remarkable run in this period. The S&P 500 index soared by an annualized 13.6% in the 2010s and the Barclays Aggregate Bond index1 rose by 3.7% on an annual basis.

U.S. investors in particular were perhaps also gratified to see the dominant performance of their domestic stock market relative to the rest of the world. U.S. stocks generated cumulative returns of over 200% in the last ten years and outpaced stocks in both the developed and emerging foreign markets by over 150% in aggregate2.

As the stock market gets off to a strong start this year, concerns about valuations are now starting to grow. During a year of virtually no earnings growth, how could stocks perform so well? As Price-to-Earnings (P/E) multiples rise, are stocks expensive now or even overvalued?

The symmetry and numerology of the year 2020 brings to mind the good old “Rule of 20” as a useful way to think about these questions. A tried and tested heuristic in the stock market has been derived from the combined levels of the P/E ratio and the rate of inflation. Over the years, markets have shown a distinct tendency to revert back to a sum of 20 for these two metrics.

In other words, the Rule of 20 suggests that markets may be fairly valued when the sum of the P/E ratio and the inflation rate equals 20.

P/E + Inflation = 20

The stock market is deemed to be undervalued when the sum is below 20 and overvalued when the sum is above 20.

This seemingly simplified insight has nonetheless been surprisingly effective. Here are some historical observations3 for the Rule of 20.

  • Markets rarely trade at equilibrium, so it’s no surprise that the Rule of 20 is also rarely achieved in precision.
  • The combined P/E ratio and inflation rate have ranged from a low of 14 to a high of 34.
  • Over the last 50 years or so, the average P/E is just below 16, average inflation is 4% and the average sum of P/E and inflation, as expected, is close to 20.

Let’s compare recent valuation and inflation trends against this historical backdrop.

Table showing Sum of P/E + Inflation.

Valuations in the last 5 years have trended higher. The average P/E in this period is measured at 18.1, which is admittedly higher than the 50-year average of 15.8.

However, the upward drift in P/E ratios is rooted in the fundamental drivers of low inflation and low interest rates, and not in speculation or euphoria as some might fear. Inflation in this period has come in significantly below its 50-year average at just 2.0%. Muted levels of inflation have been one of the most remarkable outcomes of this lengthy economic cycle.

As a result, the sum of P/E and inflation in the last 5 years registers at 20.1 which is almost surgically aligned with the Rule of 20. It also provides us with a key insight and takeaway. Higher-than-normal P/E ratios in recent years are being supported by lower-than-average inflation, and consequently, lower-than-average interest rates.

The P/E ratio, both forward and trailing, and inflation rate so far in 2020 are a notch higher than the 5-year average shown above. The average P/E this year is close to 19, inflation is around 2.5% and the sum of P/E + Inflation is just above 21.0.

  1. These levels are only slightly higher than the Rule of 20 norm and still close to fair valuations.
  2. We also attribute this small uptick in the P/E ratio to expectations of higher normalized growth in the second half of 2020, triggered by the recent truce in the trade war and concerted global central bank easing.

Any discussion of valuations or growth at this point would be incomplete without reference to the current concerns about the coronavirus. In this regard, we observe that geopolitical or “geomedical” events rarely have a lasting impact on the markets even though they inflict significant human pain and suffering. At this point, we hold a similar view that the current fears of a pandemic will also pass without meaningful permanent economic damage. We, therefore, believe that our valuation views discussed above in the context of the Rule of 20 still remain intact.

We believe that the U.S. stock market is fairly valued at these prices. We also believe that a U.S. recession is unlikely in the near future based upon the health of the consumer and the job market. We nevertheless remain vigilant to changing sources of risk and guard against them through a focus on high quality investments.

1 Bloomberg Barclays US Aggregate Bond index
2 Based on the S&P 500, MSCI EAFE and MSCI EM indexes
3 Source: Evercore ISI
4 2020 data is through February

Stock Valuations and the “Rule of 20”

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Technology Will Matter, But Not As Much As Creativity, Expertise And Personalized Service

As technology advances and the wealth management industry consolidates, wealth managers will become increasingly focused on the standardization of offerings delivered through digital means.

“The wealth management industry is consolidating,” says Whittier Trust Chairman of the Board Michael J. Casey. And with this trend, “more and more players will be focusing on technology, standardizing and streamlining processes as a means of improving margins.” “Invariably,” he continues, “this leads to much more of a cookie-cutter approach.” Instead, “what high-net-worth (HNW) investors with their intergenerational, multi-beneficiary and multi-objective portfolios need is greater creativity, customization and personalization.”

Unquestionably, HNW clients want more access to enhanced technology: digital performance reporting, telepresence, interactive data visualization, remote transaction initiation, etc. However, technologies of this nature are already becoming ubiquitous across nearly all industries, making them table stakes.

Within wealth management, “HNW investors are looking for technology not for technology’s sake, but in the context of wanting to make their financial lives easier,” says Whittier Trust President and CEO David Dahl. “You will not be able to succeed as a wealth manager unless you can transact, communicate performance, run meetings online or otherwise conduct business digitally.”

The true differentiator for HNW clients, Dahl continues, “is, and always will be, the degree of customization, specialist expertise and personalized service.” The interests and goals of HNW clients tend to extend beyond a single matriarch or patriarch to include a wide range of family members and other intergenerational beneficiaries. This means, by default, their wealth portfolios feature “a wide array of specialized risk, tax, growth, cash-flow and other investment needs,” says Dahl.

Owing to scale, “these investors also have access to a spectrum of opportunities that others cannot pursue, including specialized trusts and customized structures that make a [massive] difference in terms of enhancing performance and transferring wealth.” For these reasons, says Dahl, “technology enhances, but does not replace, personalized attention and focus.”

Customization is essential

Indeed, HNW clients “are looking for a mix of creativity, simplicity and effectiveness–an approach that takes into account their specific needs and objectives and is not just a mass-market approach,” says Caleb Silsby, Chief Portfolio Manager at Whittier Trust.

Many wealth managers and investment houses have a tendency to steer clients into products and funds. A key problem here, says Silsby, “is that investment strategies built around products don’t take into account individual needs.” For example, “a fund manager is evaluated based on performance gross of taxes and may be buying or selling securities without considering the impact of taxes on wealth creation.” However, a HNW investor tends to hold the vast majority of their wealth in fully taxable accounts, “which means all that churn managers need to drive fund performance leads to unnecessary tax expense for HNW investors.”

Attention to detail can also lead to a variety of creative investment strategies. As Silsby explains, “We can look at a direct investment in real estate and then borrow against that so that the investor defers capital gains while maintaining liquidity.” It is also important to consider the advantages that come from scale. “We can build portfolios using the core components, from scratch, in ways that address unique liquidity needs, tax strategies or existing concentrations,” he says.

Customization is essentialcreatively charitable

Creativity and personal attention can extend beyond what is expected from traditional investment strategies. Consider some of the options available in charitable giving. “Say we have a client holding a very low basis asset and at the same time, they’re charitably inclined,” says Silsby. “One thing we can do is create a charitable remainder trust (CRT).”

In a CRT, a donor or group of donors place specific assets in a trust on behalf of their chosen charity. Donors receive a current tax deduction for the present value of the assets placed in trust. From there, over a stated period of years, the trust makes annual distributions back to the donor. In essence, the donated assets become a source of income until finally, at the end of a specified period, the assets are left to the charity.

The benefit of such a structure, says Silsby, “is that a CRT takes a highly appreciated asset, such as a long-held stock or real estate holding, and converts it into a source of income.” With the upfront tax deduction, “it can be a good idea to establish these in a year where you have an above-average tax bill.” In short, he says, “it’s a creative means of helping a charity, but at the same time, reducing taxes from both capital gains and future estate taxes.

The need for personal service

Owing to scale along with what tends to be a wider net of family members and other beneficiaries, HNW portfolios benefit from attention to detail. Even minor adjustments in terms of transaction costs or tax attributes can significantly improve performance. Casey maintains that “the most effective wealth management strategies require intimacy and a personal touch.” While more and more communication and interaction will take place digitally, he says, “there will never be a substitute for personal service.”

Written in partnership with Forbes Insights.

Wealth Management 2025


  1. Customization is Essential
  2. Creatively Charitable
  3. The Need for Personal Service

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The Family Dynamics That Make Estate Planning Hard

Squabbling siblings, spendthrift heirs and hostile step-relatives aren’t just the stuff of television drama. These characters often turn up in families, too, which can make estate planning challenging for high-net-worth (HNW) and ultra-high-net-worth (UHNW) households.

“What we’ve learned at Whittier Trust working with UHNW families over multiple generations is that raising kids is hard, but doing it in the context of significant wealth is actually much harder,” said Pegine Grayson, a Senior Vice President for Philanthropic Services at Whittier Trust in South Pasadena, California.

Whether you’re dealing with motivating offspring or merely the fact that each family member has different needs, acknowledging family dynamics is an important part of estate planning.

To effectively address complicated family issues, communication with your heirs — including candid conversations while you’re alive and a “letter of wishes” to be read during the estate transition — is often extremely beneficial, said Kimberly Frasca-Delaney, a Vice President and Client Advisor for Whittier Trust.

“Many situations benefit from an overarching two- pronged approach,” Grayson noted. “Number one, put the right plan in place, and number two, communicate about it appropriately with your heirs. I think if either of those things breaks down, you may not get the desired result.”

Challenging Family Dynamics

Matching your estate plan with your family’s needs requires a delicate balance of financial, psychological and emotional considerations. Advisors at Whittier Trust often are significantly involved in this process, and in particularly challenging situations they sometimes suggest bringing facilitators and counselors to family meetings to mitigate conflict and build understanding.

Here are some of the common issues that wealthy families can face.

1. Sibling Rivalries

“Kids are wired the way they are wired,” said Frasca-Delaney. “If they’ve been fighting all their lives, a financial advisor usually can’t fix that.”

Money may increase these tensions. For example, a more financially successful sibling may look down on a sibling who might be equally successful but in a less lucrative career.

Whittier Trust will often assign different advisors to siblings to ensure that each sibling feels that his or her business is separate and apart, Frasca-Delaney said.

But it’s often important for parents to explain their goals and objectives as well as the reasons for their choices.

“Beneficiaries, whether they’re children or charities, should know there’s a plan in place and that the creators of the plan are comfortable with the plan,” said Frasca-Delaney.

Some plans may increase the potential for family disharmony. Naming one sibling as a trustee who can set limits over his or her brothers and sisters isn’t doing that sibling any favors, Grayson cautioned. She suggests choosing an impartial corporate trustee to avoid such a situation, which will almost certainly become a source of aggravation.

“No parent wants to envision a scenario where, after they die, the kids are in open warfare or suing each other,” she explained.

Grayson also recommends that parents consider giving at least some money to each sibling, rather than completely cutting anyone out of the will, and include an explanation for the disparity. Some estate planners include a stipulation that the “disinherited” heir will lose even that smaller amount if he or she sues. Such a clause may be a deterrent, even in a state where it isn’t enforceable.

A letter of intention spelling out the reasons for a disparity in inheritance — explaining that an heir squandered money during the parents’ lifetime, for instance — can also reduce the likelihood of a lawsuit.

2. Blended Families

Thankfully, said Frasca-Delaney, most of the patriarchs and matriarchs of blended families she encounters are mindful of the need to take care of every family member appropriately.

“Sometimes the children from a first marriage and second marriage may be treated differently, or will get certain assets that are sentimental or special to that first family,” she said.

A letter explaining the intentions of parents or grandparents is particularly important in blended families, she said — precisely so its members know that situations like the above, in which the daughter of a first wife might get a different or even more desirable inheritance than the daughter of a second, are expressions of the patriarch’s wishes.

The creation of a family foundation can bring families together to work on philanthropic causes — which may eventually bring them together emotionally, said Grayson.

Whether the family is a traditional or a blended one, meetings can make estate planning more transparent and smooth the way for an easier future transition.

“We work intensively with our parents to explore what it is that would be good to tell the kids now based on how old they are and how mature they are,” said Grayson.

“We create a place where everybody can come together, where the matriarch or the patriarch can tell stories of what the wealth has meant to them or what their feelings about money were or what their values are that they want to pass on to their kids. Regularly, we offer a flowchart of what their plan looks like and why, and a chance for the heirs to ask questions.”

3. Bad Influences

A trust can protect heirs from bad decisions and from others attempting to access their wealth — which sometimes even includes their friends and spouses, said Grayson.

One female client married a partner who wanted to use the bulk of the client’s family money to support his business endeavors, which ended up failing. The result was that the couple had to considerably rebuild their finances.

Fortunately, a trust was in place that prevented her from draining the family wealth too, Grayson said.

4. Spendthrift Heirs

By providing staggered payments or tying funds to specific uses, such as education, buying property or starting a business, a trust can be a strong instrument to control spending.
In some cases, money is spent irresponsibly due to substance abuse or mental health issues, said Frasca-Delaney. To address this, advisors may arrange family meetings with counselors to discuss ways to handle these issues financially and emotionally.

A trust can be written to control spending and behavior, with clauses mandating that funds will become accessible only if an heir undergoes drug testing or treatment or stays sober for a certain number of years, said Frasca-Delaney.

It’s better to proceed cautiously and conservatively in such matters, she said, even if it means offending someone.

In one family, a father was concerned that, if he died before his wife did, his sons, who had already been given and had run though millions of dollars of his money and had proved to be litigious, would rush into court to seek a conservatorship over their mother to get at her assets.

He discussed his concerns with advisors at Whittier Trust, where ultimately, the plan going forward was for him to leave his sons a nominal amount of money and establish a charitable remainder trust that would provide for his wife until she died. At that point the money would revert to charities that were meaningful to him.

In addition, Whittier Trust advised the client to explain his decisions with a letter of intent and obtain a psychological evaluation to establish competency.

That sort of communication, transparency and documentation is often key — regardless of your family dynamics.

“You can have the best plan in place and still, if it’s a shock to the kids or the spouse or to anyone at the time of your passing and feelings are hurt and expectations aren’t met, chances are somebody is going to sue somebody or there will at least be lasting resentment,” said Grayson.

Written in partnership with Forbes BrandVoice.

Estate Planning Challenges


  1. Sibling Rivalries
  2. Blended Families
  3. Bad Influences
  4. Spendthrift Heirs

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Demand for triple net lease investment opportunities has been rising consistently over the last two decades. Triple Net Leased Properties (“NNN”) are properties leased to tenants, typically a single tenant, who is responsible for all of the operating expenses of the property including maintenance, insurance, and property taxes, on top of their monthly rent payment. The most desirable properties are leased for a long term (10 to 15 years) to Class A tenants and often contain options for the tenant to renew.

Investors flock to these properties due to the perception that they are low-risk, low maintenance, require little labor from the landlord and provide consistent cash flow for a long period.

The largest myth of triple net leases is that the tenant doesn’t always renew or exercise their lease option. Many investors go in thinking the tenant will stay in the property indefinitely. There are several reasons a tenant might ultimately vacate a property — business models change, the store does not perform well, or they decide to relocate to a newer property.

When considering an investment in a triple net lease property, it is important to figure into the mix the implication of a tenant vacating the property. Here are a few things to think about when looking at a triple net lease property to ensure you are buying only the highest quality properties with the best downside risk.

Location is Key

In real estate investing, never overlook the location of the asset. Even with a long-term lease in place, it is important to consider location since that factor alone can determine if a business will survive and/or whether the landlord will be able to re-lease the building if the tenant vacates. It is vital to analyze the long-term population size and economic conditions within the immediate area and consider the area’s potential to experience positive growth. In the case of retail buildings, assure that it has good frontage on a well-trafficked street. As well, know how many pieces of vacant land and new commercial development are near the property, since tenants will consider moving to a newer building at the end of the lease. If you can find a well-located property in an infill location with high barriers to entry, the risk of inability to re-lease the space will be much lower.

Credit of the tenant/signatory on the lease

Just because a tenant has signed a long-term lease does not mean they will be able to make their lease payments over time. Be wary of leases that are signed by a franchisee whose only credit backing is their personal balance sheet. It is very hard to collect from individuals who vacate the space in the middle of the lease term. Make sure the lease includes a guarantee from the corporate entity operating at the location and request the financials of that entity. An accountant will be able to run through the company’s balance sheet and determine their financial viability.

Built-to-suit buildings

Often single tenant NNN buildings are built very specifically for the tenant’s needs. Buildings with high tenant-specific build-outs can be problematic. Why? If the tenant ever vacates, it can be very costly to bring the building back to a standard condition in order to lease it to a tenant who may have significantly different needs.

Capital needs over time

NNN lease landlords often think there will be no long-term capital needs. Unfortunately, that’s wishful thinking. Wise landlords plan ahead knowing that over time a significant capital investment will be required to maintain the property; the roof of the building will need to be replaced, the HVAC units upgraded, and the parking lot will require resurfacing. It is important to create a reserve for those items since, if a tenant does vacate, those costs will all hit at once.

Absentee management

A novice mistake investors make with NNN leases is assuming that the tenant will maintain the property to the original standards. That is often not the case. Landlords need ongoing oversight to ensure the tenant is meeting their lease obligations to keep the property in good shape. In the worst of cases, the tenant can leave the property without fulfilling any of their capital expenditures responsibility to the property, betting that the cost to litigate versus the cost to repair is prohibitive for the landlord to pursue. This can leave the landlord with significant rehabilitation costs that otherwise would have been addressed and paid by the tenant during the lease period.

While the list of considerations may sound daunting, Triple Net Leased Properties can be a great long-term investment. Our advice? Be wise. Before jumping in, perform due diligence upfront and fully understand the risk/reward proposition to help assure a successful investment.

The Myth of the Triple Net Lease

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It is an era of complex fee structures with many high-net-worth (HNW) investors unaware of just how many forms and layers of fees and costs are lurking within their portfolios.

If you speak with an HNW investor about the fees associated with their wealth management relationships, odds are, you’ll hear them assert that their “all-in” costs are something like 50 to 100 basis points per annum. Probe a bit more, though—ask whether there could be additional fees buried deeper within the relationship—and most will say absolutely not. But in truth, “unless you’re pounding on the desk demanding to see a detailed account of all your fees, direct and indirect, you’re not going to have a true accounting of the all-in costs of the relationship,” says Sean C. Kraus, senior vice president and senior portfolio manager at Whittier Trust.

Hidden fees and costs can be elusive. Four of the most frequent include:

1. Pressure to sell firm products

The industry is consolidating. More and more wealth management groups are being folded into much larger financial services conglomerates. Now, consider what can happen to any financial advisor working on behalf of clients but doing so within the auspices of such a group.

All advisors are incentivized to sell, bringing in new clients and additional assets under management. But in the largest firms, advisors are often asked to use certain managers, or in some cases, certain securities. As it turns out, the favored managers may not be the best available for clients and the securities in question might be those the firm is already holding in inventory and cannot easily sell to their institutional clients. In either case, says Kraus, “the choices may appear appropriate, but in truth, they may not be working in the best interest of their clients.”

In addition, fee arrangements with managers can dramatically affect performance. Though a firm is saying that its choice of managers is based on quality and appropriateness, in reality, the choice could be biased by fee concessions by certain managers trying to increase assets under management (AUM). “So investors may be prevented from [access to] the best of the best in terms of managers,” says Kraus.

Note that in certain cases, advisors themselves may not be focused on such realities. For example, a firm might be charging its HNW investors an overall portfolio fee but then also require its advisors to use specified managers. So, in addition to the overall 50-100 basis point management fee, investors are set up with sub-accounts in various equities and fixed income securities run by outside managers charging an additional 30-50 basis points. The advisor is conditioned to exclude the extra fees and costs from the calculation given they typically do not see these costs clearly listed on client statements.

Over time, an advisor might note that relative to other managers, certain client accounts aren’t performing quite as well and so takes a closer look. “So the advisor seeks out the group that decides which managers to bring on to the platform and asks, ‘Why aren’t we using these stronger-performing managers?'” says Kraus. And what they’re told is that the firm reviewed these new managers but they are not an option without a good reason provided. Thus, through no fault of their own, an advisor’s choice of high-quality managers often becomes very limited, which also affects performance.

2. Structured product fees

Matters can go even further south in cases of structured products. Often, a financial services firm will listen to the concerns of a client, perhaps surrounding cyclical ups and downs inherent in the markets or even an investor’s business. And so the firm will sometimes offer a customized, option-infused derivative “solution.” For example, says Kraus, “That could be a product where you are guaranteed to earn 6% on your investment over two years so long as the S&P is no lower than a certain set point.”

Strategically, the idea of limiting market risk and setting an acceptable return sounds great. “But unless you find several hours to go through the accompanying 100- to 250-page [prospectus] to find where discussions of fees have been buried, you won’t notice you’re paying 2-3% in fees to purchase these instruments and many times giving up dividend yield,” says Kraus.

Even that’s not the end of the hidden fee story. As Kraus explains, “If the reason for the structure goes away or the market turns and the investor wants out prior to maturity, then there are additional fees to sell.” In short, says Kraus, “Any time a fee structure in a relationship or a product sounds too good to be true, it most likely is. There’s likely something buried deep within.”

3. Inappropriate tax expense

One of the most deeply hidden costs of outside equity managers and mutual funds is unnecessary tax expense. As Kraus explains, “Most funds are being managed looking at absolute return for the fund itself. For the mass market, they’re not worried about whether the sale of assets within the fund could trigger a taxable event.” This is fine for investments trading within tax-advantaged accounts, but most HNW investors’ assets are of a taxable nature—that’s the nature of private individual or family portfolios. So, advisors who are steering these investors into funds without taking into account the overall tax picture are almost always generating unnecessary taxes, which also affect performance.

4. Wholly unnecessary expenses

Often, investors encounter fees and costs that should never have been on the table in the first place. Consider the case of precious metals. “If someone wants a position in gold, we steer them to a low-cost ETF,” says Kraus. But often investors instead acquire physical gold, which now in addition to a transaction commission leads to annual storage fees. Similarly, investors are enticed into paying significant fees for small positions in alternative investments “so much so that it’s nearly impossible to generate any worthwhile returns given the commensurate risks and illiquidity,” says Kraus. Advisor placement and high annual fees in general to hold small positions sometimes eliminate what would be a solid return from the underlying investments.

Demanding transparency

Fee structures have become so complex and hidden fees so common that it can be difficult for even the most sophisticated investor to understand. “I can’t think of very many who would [even] want to expend the time required to do so,” says Kraus. “Whenever we take a closer look at anyone’s existing fee structures, in most cases, there’s a vast gulf between what they believe they’re spending and the actual costs.”

What Kraus strongly recommends “is that HNW investors get together with their advisors and wealth managers and demand a detailed accounting of their fees, commissions and product costs, including managers and mutual funds.” Be certain, says Kraus, “to ask to see this performed for every aspect of the relationship: every account, every product. It should be done annually if possible as well.”

Many institutions, says Kraus, “will balk, delay or otherwise say this isn’t feasible.” But the truth, he says, is that drilling down within the account and even to the transaction level is, for these firms, a relatively easy matter. Firm systems typically allow a perusal of transactions over almost any time period.

It is a fact, says Kraus, that the overall trend in the wealth management industry “is toward greater complexity and [diminished] transparency.” Kraus maintains that the only way to avoid hidden and unnecessary fees and costs is to drill deeply into every relationship and transaction of any significance. To this end, he suggests, “speak with us, and we can forensically evaluate the various manager and broker fees and even the turnover on the fund since most aren’t being managed for taxable clients.” It is only with such details and transparency “that an HNW investor can be clear on the actual costs of the relationship.”

To learn more, read “Reality Check: High-Net-Worth Investors Face Trends Of Lackluster Service and Performance.

Written in partnership with Forbes Insights.

Coping With Complexity- Four Pitfalls Informed Investors Can Avoid

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A 2019 Forbes Insights survey finds that 68% of high-net-worth (HNW) investors say family relationships greatly complicate wealth management. Note for now, this figure rises to 77% among those managing their wealth on their own. (We’ll come back to this later.)

But there needn’t be significant or persistent discord, says Caleb Silsby, chief portfolio manager at Whittier Trust. With the right strategies and actions, principals “can communicate intentions, set the right tone and generally create harmony across stakeholders and generations.”

The Seeds Of Discontent

Managing a large portfolio of $5 million to $15 million or more “is challenging enough under the best of circumstances, like where there’s a single principal and he or she is the one who, after receiving the best counsel we can offer, ultimately calls all the shots,” says Silsby. But even in such cases, “large portfolios like these are being run for the benefit of many generations, so the trick becomes balancing a wide range of needs and interests.”

It begins with the founders of the business or some other initial source of the wealth. But over time this expands to include children, and then wives and husbands of the children, and then grandchildren and so on. What happens, says Silsby, “is that the potential for conflict—for family squabbles, differing needs, viewpoints and interests—grows exponentially.”

Differences in expectations and beliefs and even arguments can arise among the closest families. But where significant wealth is involved, disagreements, if not carefully addressed, can become virulent. “There can be differences in how the wealth should be distributed,” says Silsby. “There can be disagreements over whether to continue investing in the family business or to diversify; invest purely for return or introduce values-based, ethical investing; pursue aggressive growth strategies and cryptocurrencies or stability.”

Just as often, “where a family business is involved, there can be strong differences of opinion as to who should be chosen to take the reins,” says Silsby. There cannot be more than a single CEO in any going concern, says Silsby, so the choice of next generation leader, if not obvious, can lead to resentment.

Keeping The Peace

Varying degrees of disputes, from mild to severe, are likely inevitable among wealth stakeholders. However, their frequency and degree can be limited by taking a proactive approach to communicating beliefs, goals and objectives. According to Silsby, this means “HNW investors have to focus not on their wealth, but rather on the ways in which wealth can help them be better parents and family members first. They have to work hard to instill values in their children.”

HNW principals can take a number of other actions to more clearly communicate desires and wishes for the future. One of them is to develop what is known as a letter of wishes. Such a letter “can emphasize education. It can emphasize self-reliance: Use this wealth and income to supplement their lives, but by all means inspire next generations to set out to make a mark of their own,” says Silsby. “Or it can inspire philanthropy—set out a vision for how the wealth can be used to help others.”

Although it is a formal communication that explains intentions and hopes relating to the family’s wealth, a letter of wishes “is in no way binding,” says Silsby. “But it goes a long way toward helping others understand the thinking behind any decisions and the way forward.”

Another effective means of engaging and aligning hearts and minds is to conduct a stakeholder retreat. Here, says Silsby, “the idea is to organize a weekend at a destination—a place where people get away from their homes and careers and can interact with one another to focus on the goals and values of the investment principals.” At such retreats, often facilitated by Whittier Trust, stakeholders and wealth owners can openly discuss key issues, such as the performance of the portfolio as well as how funds are being allocated or otherwise placed into trusts going forward. This is an opportunity, says Silsby, “to proactively address concerns and interests and keep communication flowing.”

A particularly effective element of such an event, he says, is to associate such a retreat with some form of philanthropy. For example, at one such recent gathering, Whittier Trust helped “bring together family members and stakeholders for a weekend of assembling bicycles for underprivileged kids,” who got to ride off with their bicycles that same day. Such events will also feature presentations and workshops focusing on fundamental wealth management, but the philanthropic aspect, says Silsby, “is a very powerful means of getting people to participate and to pull together.”

When all efforts to instill harmony fail, there are other options. For example, if a principal feels strongly about keeping wealth in the hands of the nuclear family, provisions can be drafted to exclude asset ownership by extended family members. Or if certain members feel strongly that investments should be avoided in certain sectors, portions of the portfolio can be carved out. Finally, if there’s a falling out with a particular stakeholder, an executor can be appointed to address that individual’s interests without further direct involvement.

Injecting Objectivity

In all of this, Silsby maintains, “do not underestimate the value of a third-party wealth manager as a source of objectivity within the discussions.” Disputes or simply mere differences of opinion within a family are nearly inevitable. But by engaging a wealth manager, a principal can say “don’t take my word for it—listen to what our advisor is telling us,” says Silsby. In fact, this may go a long way toward explaining why family issues create significant tension among 77% of those who manage their wealth independently versus only 66% of those using advisors. As Silsby concludes, “It feels less personal when a third party delivers the news. And it’s a bit harder finding fault with the views of a trusted advisor.”

To learn more, read “Reality Check: High-Net-Worth Investors Face Trends Of Lackluster Service and Performance.”

Written in partnership with Forbes Insights.

Key Strategies For Maintaining Stakeholder Alignment Amid High-Net-Worth Portfolios

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