Why Marketing Living Trusts Requires A Very Narrow Focus

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MADISON, Wis.-Credit unions seeking to expand into the market for living trusts would be wise to narrow their marketing focus to high-income and high-asset members older than 50, according to a study released by the Filene Research Institute.

The study, "Credit Union Implications of Living Trusts," examines trends in living trusts and consumers most likely to be interested in the product. The study urges CUs to especially consider women's needs in establishing trusts and to further target members with significant assets in defined contribution plans.

Filene reported that in 1980 84% of workers at medium to large companies were eligible for defined benefit plans from their employers, but that figure had dropped to just one-third of such workers by 2008. In the vacuum trusts are being replaced by defined contribution plans, such as IRAs and 401(k)s.

Approximately 10% of U.S. households with an adult 50 or older has a living trust, the study reported, with the average trust holder 72 years old with 14 years of formal education, $1 million in nonhousing wealth, and three children. That figure may rise, the study's authors contend, as new retirees receive retirement benefits as lump-sum rather than annuity payments.

"As financial partners of choice for many of today's retiring workers, credit unions should take a hard look at offering trust services, which can keep valuable relationships and valuable assets at the credit union," the Filene Research Institute said in a statement.

The study was authored by Jinkook Lee, Filene research fellow and senior economist at RAND Corp.; Arie Kapteyn, senior economist at RAND; Jung-Seung Yang, a PhD candidate in economics at Seoul National University in South Korea; and Christopher Sharon, a doctoral fellow at the Pardee RAND Graduate School and assistant policy analyst for the RAND Corp.

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