How Supplemental Needs Trust Funds are Invested
Whether you are an estate planning, elder care, family law, plaintiff or in-house attorney who sets up supplemental needs trusts, you need to be aware of the roles Alabama Family Trust and its investment partner, Warren Averett Asset Management play for your clients ongoing.
The Alabama Family Trust staff discusses how trust funds can be used with beneficiaries and their trust representatives frequently. Our investment partner, Warren Averett Asset Management discusses how trust funds are invested.
In 2018, Alabama Family Trust’s board of trustees selected Warren Averett Asset Management to invest trust funds. Warren Averett is ranked as one of the Top 50 Fee-Only Wealth Management Firms in the US by CNBC. Four of its seven offices are located in Alabama, and its 50+ advisors advise on $2.6 billion in assets.
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Alabama Family Trust Investment Objectives & Risk Tolerance Questionnaire
Before a new trust’s funds are invested, each trust representative completes an in-depth investment objectives and risk assessment questionnaire which serves as a guide for the trust representative to select investment options with Warren Averett Asset Management. The goal is to identify the investment objectives and risk parameters for each beneficiary’s unique situation. The questionnaire introduces these topics:
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Requirements for investment income – In many cases, trust income needs to be invested in a way to be readily available to meet a beneficiary’s immediate daily expenses. Other beneficiaries may need an investment plan for assets such as gifts, inheritance, settlement, or court judgement that focuses on long-term growth..
Investment strategy goal – Some trust representatives, like those faced with the need for elder care for a beneficiary, need full liquidity for immediate use without regard for inflation. Others are looking to increase the funds in the trust by investing to gain higher than average returns through an estate plan supporting a disabled child or adult.
Investment objective – Trust representatives are asked about the needs for income, capital appreciation, and the risk tolerance or volatility that they can handle. This factor has been especially important during 2020’s market volatility due to the pandemic. Helping your client select a trust representative with some financial acumen is very important.
Timeline for the trust –Trust representatives can thoughtfully consider the difference in investment goals whether they expect a 1- to 3-year or a decade(s)-long timeline. The longer the timeline, the impact of market volatility decreases.
Investment Options
Based on the score from the questionnaire, Warren Averett can discuss which of several investment options might be best for a specific beneficiary’s trust. The options range from Warren Averett funds which are focused on income, conservative, balanced, growth or pure growth investment as well as two Vanguard LifeStrategy funds.
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Reports on Investments
A Warren Averett report on Alabama Family Trust funds in aggregate is posted on Alabama Family Trust’s Documents webpage each month, and individual trust reports are provided monthly to the trust representatives.
Once you’ve set up the correct type of supplemental needs trust for a disabled Alabamian, Warren Averett Asset Management and Alabama Family Trust become your follow-through team. The supplemental needs trust funds are invested according to the trust representatives’ request, and the funds are then spent to augment the lives of disabled trust beneficiaries by funding more services and items than supported by Alabama Medicaid and other means-tested government benefits.
Thanks for making us part of your team.
For more information, visit www.alabamafamilytrust.com
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