'A Holding-On-To-Assets Strategy'

Register now

With economists predicting between $12 trillion and $17 trillion will pass from one generation to the next in the coming decade, credit union members will need an effective way to accommodate that "money on the move."

The best way to accomplish this is to offer trust services, suggested Dan Wroblewski and Gary Weuve at CUNA Mutual's Discovery Conference. If credit unions aren't there to offer trust and related services, members will take these new assets, or the assets they wish to transfer, and entrust them elsewhere, the two wealth management experts said.

It was announced prior to the meeting that MEMBERS Trust Co. had received federal approval as the first independent, national trust owned by credit unions. The cooperative-like trust organization, formed by Suncoast Schools FCU and CUNA Mutual Insurance Society, will be able to do business in all 50 states, will be operated independently of its two parents, and will be based in Tampa, Fla.

Wroblewski, vice president of Wealth Management at CUNA Mutual, told attendees it's extremely important for members to have a viable estate plan, so assets can be distributed according to the member's intentions.

"Only through good estate planning, along with preparing the proper documents, can members meet their financial planning objectives and transfer assets according to their wishes," Wroblewski said.

Weuve, an assistant VP-financial services at CUNA Mutual, said trusts can be crafted to offer a variety of options to specify how proceeds are distributed to survivors or allocated for investment. "With second marriages and extended families, it's important that wishes are put into writing," Weuve said. "Trusts are a good solution to a lot of financial services issues, such as taxes, estate planning and financial management."

Weuve said credit unions should be aware that high net-worth members are probably following a national trend of consolidating their accounts into a single institution. "Banks and brokerage firms have trust companies. If you want to play, you'd better have one, too."

Wroblewski cited data showing 80% of inheritors switch their primary financial advisor after receiving $1 million or more. That percentage of switchers rises as the inheritance increases. "To hold onto or to capture any of that money, your credit union needs to have trust services," he said. "It's really a holding-on-to-assets strategy."

Wroblewski added that another advantage of trusts is that they allow members to keep their asset transfers private, unlike public records which are part of a probate court action.

"I don't think members go out looking for trusts," Weuve said. "They've been told they should have one, maybe by their attorney. They go to their credit union for help. And that's the moment of truth. If the credit union says 'no,' the member goes elsewhere."

For reprint and licensing requests for this article, click here.