By definition, a fiduciary is a person who holds a legal or ethical relationship of trust with one or more other parties. But beyond that, there’s no fixed road map for how such a person functions day to day. Too often, trusts are forged once and assumed to perform the function for which they were intended without care and feeding.
The Bank of Clarke’s new Executive Vice President, Chief Fiduciary, and Bank Legal Counsel Debra Purrington, operate differently. Debra says the Bank of Clarke’s commitment to community and entrepreneurship so perfectly mirrored her own philosophy that she leaped at the chance to implement the kind of trust department within the bank’s wealth management services that she’d always dreamed possible. “I was determined to create a profitable trust department that really worked for people -- one that didn't just sort of hand investments over to someone who would sit on them.” Such a department would be proactive, with clear objectives for administering trusts based on classic project management principles.
Debra forged her own expertise in the field of practicing law in Western Massachusetts for 32 years where she and her husband raised their family. During that time, she spent 10 years “in house” at Bank of America in Hartford, West Hartford and Springfield. More recently she worked with The Fauquier Bank, which recently merged with Virginia National Bank, then joined The Bank of Clarke.
Many of her clients have followed her from both Massachusetts and Fauquier, as well as many team members. Her team now has eight people who proactively administer trusts, review them weekly, and grow their clientele strategically. While BoC does administer some smaller trusts, Debra wants to grow in a direction that makes the added attention cost-effective for both the bank and the client. Much smaller than $300,000 in assets, and some investment clients might be better served by a brokerage if they have investment know-how.
“Quiet clients” who don’t advocate for themselves don’t receive attention from some trust departments, and that can be a recipe for disaster. because, “In the trust area, mistakes or problems multiply over time,” Debra explains. “We want to administer trusts differently. We offer not only the standard Trust Services, but in a way that pledges to assure our clients that they will get hands-on attention every single year.”
To determine which things should be addressed annually, Debra said, “we identify objectives that need to be accomplished and things that should be checked and reviewed every year. And, we engage people to check and review them.”
It’s that specialized list of objectives that forge a fully functioning trust department, Debra says. “I had run a trust organization at Bank of America but I had also represented probably dozens of trust departments over many years and saw what kinds of issues could lurk in the trust area ... there are routines that can prevent problems if you are fastidious about applying those routines.”
Clarity of purpose is critical. Each trust the bank administers has an investment policy statement when accepted for administration if not originally. “We create a policy statement that says, ‘here's what this trust is about. Here's what it is trying to accomplish. Here's the timeframe in which it's likely to accomplish it. What should our investment portfolio look like?’,” Debra explains. “That's done as a collaboration between our trust officers and our registered investment advisory firm. We put together a portfolio for each client, and that level of care goes into every single one, whether it's $250,000, or $50 million.”
“We” includes the bank’s trust committee, to which Debra and her team are accountable. The goal of a trustee is to follow the directives in the trust document. Being a trained tax attorney gives her highly useful expertise when determining the consequences of a plethora of options when disbursing funds. She also is supported by “professionally trained, lifetime-dedicated people who work on the trusts here.” Each is then subject to several levels of review at their discretion. To manage investments, the bank hires a registered investment advisory firm that provides services under the bank’s supervision to each client., Investment Performance is monitored by state-of-the-art reporting technology.
Why have a trust? The most common reason is to control tax liability in Virginia, which still has a probate or death tax. “Special Needs Trusts,” which are on the rise, often hold family assets in a trust to qualify a disabled person to receive public benefits. “We take a limited number of special needs trusts, which distinguishes us from most other banks,” because it calls for specialized administrators, Debra explains. “It's a service that we want to provide because we’re a community bank and many of the people in our community need the services.”
More common are marital trusts intended to support one spouse if the other dies, with the balance of wealth going to the children after the survivor passes. Charitable remainder trusts support the owners during their lifetimes, with the remainder going to charity upon their death. These may be administered in such a way as to mitigate tax liability for those with higher incomes. Educational trusts for children, trusts that hold a large gift for a person until they reach a certain age – each has its own characteristics and instructions that may need to be evaluated by trustees. “Being a trustee sometimes means being in sort of a surrogate parental role. We decide, ‘Does this make sense? Are you going to run out of money by doing this?’ We ask those questions all the time.”
Trusts aren’t for everyone, she says – whether to have one is a discussion everyone should have with an attorney. But, from her perspective, and under her careful watch, “it's a powerful and useful tool that addresses certain issues and needs. It's a workhorse. You decide how you want it to work for you.” See bankofclarke.bank/.
