Charlie's Compass
CUSTODIAL ACCOUNTS TO THE RESCUE:
CLEAN UP AND TAKE CHARGE OF YOUR FINANCES
Perspectives Offered by Charles Curtin, JD, LLM, CTFA
VP, Trust Officer
Technology is allegedly supposed to make life easier. You can order a ride from your phone, use your debit card to pay for parking, and have a conversation with your car to adjust the temperature. All marvels for sure, but I can’t really say these examples have substantially enhanced the quality of my existence. In fact, I would argue technology has made daily living more cumbersome. I can only remember so many passwords.
The pace of technologic change has changed people’s attitudes on work and life. We are in our Instant Gratification Era. Instant riches are now expected. Patience from both the employee and employer is a thing of the past. According to the Bureau of Labor Statistics, the average worker only stays at his or her current employer for less than 4.5 years. Gone are the days where you can stay at a generous company for 35 years and receive a nice watch and pension for your service. This is not today’s world.
As people move from location to location, job to job, and romance to romance, they also coincidentally acquire a number of financial relationships. Most likely, one single person will have retirement, investment, bank, and other accounts spread across various institutions. This is an unorganized way to conduct business. Accounts are often forgotten or overlooked. In certain circumstances, tried and true practices may have greater value than spreading ourselves thin across the newest offerings. Having all of your financial accounts under one roof can provide benefits in more ways than you may expect.
Simplicity. The advent of electronic investing has been liberating. More people are deciding to go it alone with their investments, electing to not utilize traditional financial advisors. This type of investor often holds several brokerage and/or investment accounts. The Honesdale National Bank encourages a Trust Department custodial account as a better alternative.
A custodial account can consolidate all kinds of investments and cash into one single account. The account, including all investment decisions, are managed by you, the customer.
Earning Potential. You’ll be taking advantage of potentially higher interest rates on available cash, reduced trading costs and lower share costs with many brokerage houses due to the Bank’s status as an institutional investor. The Trust Department then collects all the accounts’ investments, income, interest, and dividends, and will also manage all of its bookkeeping and safekeeping responsibilities. The account can be further utilized like a personal bank account to pay bills on time or conduct any type of other banking transactions. Just think, instead of receiving a dozen tax reports at the end of the year from different investment companies, only one will be sent by the Trust Department.
Privacy. Trust custodial accounts are private. Bank trust departments are separate from the retail side of the bank. This means that only trust personnel have access to individual account information. In addition, all of HNB Trust Department’s accounts are pooled together in one large account held at a different financial institution. This pooled account contains no individual customer information, only the bank’s name. When a custodial account holder decides to make purchases or sales on behalf of their account, we contact our outside institution, who then makes the purchase or sale on the bank’s behalf. After the transaction settles, we internally debit or credit the particular customer’s account. This ensures that Trust Department transactions are completely anonymous.
Ease and Speed. Custodial accounts also offer estate planning benefits. The executor or executrix of an estate’s job is to gather up the assets of the deceased, pay debts, and then distribute the remainder to the heirs. It is a herculean chore, which becomes even harder if the estate has money at every bank or brokerage house known to man. If an estate does have assets at a number of different places, it often takes months to settle everything. A custodial account makes things much easier for the executor or executrix. Instead of contacting and preparing paperwork for numerous financial institutions, all they have to do is close out one custodial account. Further, the executor or executrix will not have to spend additional hours trying to value far flung assets because the custodial account should have all of the values recorded and in one place.
Getting Started. The creation of a custodial account at The Honesdale National Bank is simple. Upon entering into a custodial relationship with us, we will initiate a transfer of your investments to the account. After the Trust Department initiates management, you will continue to make all investment and withdrawal decisions. The Honesdale National Bank will have no discretion with regards to transactions.
For more information on the locally managed, sophisticated solutions offered by The Honesdale National Bank’s Trust Department visit hnbbank.bank or visit one of our convenient offices today.
Investments are: *Not FDIC/NCUSIF insured *May lose value *Not financial institution guaranteed *Not a deposit *Not insured by any federal government agency.