^ HG 4319 E8 U58 E^TAT Ei AND TRUJTJ UNITED JTATEJ MORTGAGE &L TRUJT GOMPANY NEW Y O R. R V3/1 (SfOvmll Itttnerattg ffitbrarg 3tlfata, Jfem ^ork U.S. Mortgage and Trust Company, Cornell University Library HG 4319.E8U58 Administration of estates and trusts, 3 1924 024 892 071 Cornell University Library The original of tliis bool< is in tlie Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924024892071 The Administration of ESTATES AND TRUSTS JJNITED STATES MORTGA'GE & TRUST COMPANY "^ NEW YORK 55 Cedar Street Bhoadway at 73d St. 125th St, at Eighth Ave. i \{r\^^3> Copyright 1917 United States Mortgage & Trust Company New York CONTENTS Estates The Executor of Your "Will Practical Knowledge Required How the Estate is Administered Trust Company as Co-executor with an Individual Executor's Fees Trust Company Economies No Outlay for Bond Curtailment of Expense for Advice Economy of Large Business Avoidance of Legal Penalties No Expense for Safe Deposit Box Lessening the Danger of Loss The Importance of Making a Will Permanent Protection When Making Your Will How Your Personal Property is Distributed if You Leave No Will New York State Inheritance Tax Rates of Taxation on Inheritances Protecting Your Interests The Administrator Personal Trusts What are Personal Trusts? The Parties to a Trust The Trust Company as Trustee Under Will Trusts in Force During the Life of the ISIaker Purposes for Which Trusts May be Created Some Advantages of Voluntary Trusts Guardian — Commiiiee — Custodian Trust Company iis Guardian How Appointed Duties Trust Company as Committee Trust Company as Custodian As Treasurer of a Corporation How Investments are Protected Trust Funds Kept Separate Legal Investments Provision for Special Investments Information as to Investments Advantages of Trust Comipani} Service Summary Trust Company Service is Economical Trust Company Service is Convenient Consultation Welcomed Safety for Your Valuables Equipment Charges THE ADMINISTRATION OF ESTATES AND TRUSTS Of vital importance to anyone owning property are likely to be: The making of a will and the appointment of a suitable executor. The setting aside of a trust fund. The selection of a custodian for property. The choice of an agent to manage estates and trust funds. The safeguarding of valuables. This booklet has been prepared with a view to afford- ing helpful information bearing on these matters. It answers, with facts, questions frequently brought before the officers in charge of our Trust Department and it is hoped that it may serve the needs of many of our clients and friends. Individual Trust" Services Two Classes of Trust Services Two classes of trusts are committed to the Trust Department of the United States Mort- gage & Trust Company : Individual Trusts — created by individuals. Corporate Trusts — created by corporations. The scope of this booklet is confined to Individual Trusts which are of direct personal interest, not only to men but women. To women who have had thrust upon them questions relating to the care of funds or the management of estates, the Trust Company has proved of inestimable value. It has relieved them from a multitude of financial worries. It has given them protection and guidance when most needed. 17] United States Mortgage & Trust Company A Wide Range of Helpfulness This Company is qualified to act as the representative of both the living and the dead in practically every lawful business relation in which an individual is qualified to act for another. The amount involved may be as small as a single bond, or it may be unlimited. Some "Individual Trust" Services 1. Executor under Will — Carries out pro- visions of the will. 2. Administrator — ^Appointed by the Court to administer an estate when no will has been made, or no executor qualifies. 3. Trustee under Will — "Testamentary Trustee"; manages trust estate under a will. 4. Trustee under "Deed of Trust" or "Agree- ment" — Manages property subject to the terms of a deed or agreement. 5. Guardian — Of the property of a minor. 6. Cmnmittee — In charge of property of one who has been adjudged mentally incompetent. 7. Custodian — Of securities or other property. [8] I ESTATES United States Mortgage & Trust Company The Executor of Your Will \Mien you make your will you are con- fronted by the problem of choosing an execu- tor to carrj" out its pro^'isions. The choice of a competent executor is apt to be as important as the drawing up of the will itself. Practical Knowledge Required An executor's duties are not simple. To be well discharged they require much special knowledge and involve considerable time and trouble. Every step is hedged about with legal formaHties and technicalities which must be comphed with and which are totally mrfamihar to the layman. The executor may be either an indiA-idual or a Trust Company. When the appointee is a woman she is known as the executrix. Because of its special fitness for the task and its constant experience the Trust Com- pany is steadily growing in favor as executor. [10] The Executor of Your Wi How the Estate is Administered The United States Mortgage & Trust Company as executor under the law does these things: 1. Probates the will. (The will is deposited in the Surrogate's Court, where it is proved, or, as the language of the law expresses it, "probated." This establishes its validity in manner and form of execution and the capacity of its maker. The Surrogate's Court then issues to the executor "Letters Testamen- tary." These are the executor's legal authority to act.) 2. Files with the court an inventory and an appraisement of the personal property when necessary. 3. Collects claims of the deceased. 4. Advertises for claims against the estate. 5. Pays the lawful debts in the order of priority as established by law, and when necessary sells securities or other prop- erty in order to obtain sufficient funds for such purpose. 6. Submits a financial statement to the State Comptroller, for the purpose of ascertaining the State Inheritance Tax, and pays this tax. [11] United States Mortgage & Trust Company 7. Distributes the property and pays the legacies in accordance with the will, sub- ject to the provisions of the law. 8. Accounts to the Surrogate's Court, pays the Court costs and is discharged. At any point in the proceedings difficult problems are likely to present themselves. This Company by the very nature of its business is called upon to solve such problems daily. Its wide experience in administering estates gives it a practical knowledge which an individual executor cannot be expected to possess. The Trust Company as Co-Executor with an Individual Under certain conditions it may be thought desirable to have a member of the family who has intimate knowledge of its affairs act as executor. In this case such person and the Trust Company may be appointed as co- executors. 12 Executor's Fees Executor's Fees The compensation of an executor is regu- lated by law. The commission is the same whether the executor is the United States Mortgage & Trust Company or an individual unless otherwise provided for by the will. The commission is a percentage of the sums of money received and paid out by the exe- cutor. In the State of New York the rates are : For sums not exceeding $1000, 5%. For any additional sums not exceeding $10,000, For all sums above $11,000, ^7o. [18] United States Mortgage & Trust Compan; Trust Company Economies Among the economies of having this Com- pany appointed executor are the following: No Outlay for Bond The Trust Company may save the expense of a Surety Bond. This is sometimes required of individual executors. The premium upon such a bond is paid out of the funds of the estate. It may amount to a considerable sum. The Trust Company is exempt from this requirement except when specially directed, its capital and surplus affording ample security. Curtailment of Expense for Advice The Trust Company is less likely than the individual to expend funds of the estate for legal or other advice. Dealing over and over again with all the details of executorship it has the experience to cope with all phases thereof. Economy of Large Business The Trust Company is able to conduct its business economically because of its large volume. Operations which are part of its general routine become special tasks for individual executors, involving extra charges. The Trust Company makes no charge for office rent or clerical work. The individual executor often does. 14 Economy of Trust Company As Executor Avoidance of Legal Penalties The Trust Company by reason of its experience is able to interpret and obey the laws regarding taxation as applied to the estate of a decedent. A similar range of experience may be lacking in the individual executor. Neglect to comply with the law is apt to result in loss to the estate. No Expense for Safe Deposit Box The Trust Company having its own safe deposit vaults saves the estate the expense of paying for the safekeeping of securities. [is: United States Mortgage & Trust Company Lessening the Danger of Loss It is a matter of common knowledge that estates in the hands of individual executors not infrequently diminish in value. For example, the individual executor is often not qualified by suitable business experi- ence. A man who has the requisite business ability usually has the least time to devote to the exacting duties of an executorship. Losses to estates running into many thou- sands of dollars often appear in the records of the Courts, due to the appointment of poorly qualified executors. Under the law an executor may be held liable for certain losses. Frequently his finan- cial responsibility is insufficient to enable him to make good. The Trust Company, on the other hand, with its large capital and surplus, is fully responsible. [16] The Importance of Making A Will The Importance of Making a Will By making a will You exercise your 'personal choice between the individual and the Trust Company to administer the estate. You have the opportunity of leaving pro- perty in trust for a wife, children or others (thus safeguarding it against waste or bad management) . You save delays and expenses by doing away with the redtape involved under the appointment of an administrator by the Court. You avoid danger of family disagreement over the appointment of an administrator. You have the opportunity to exercise your preference as to the appointment of a Guard- ian for your children. You can protect your heirs from the hard- ship of having to assume business respon- sibilities for which they may not be fitted. In making a will and appointing the United States Mortgage & Trust Company as execu- tor, you entrust to the care of a body of respon- sible, experienced specialists the handling of an intricate business and the legal procedure connected therewith. [17] United States Mortgage & Trust Company You have the assurance of safety and of efhcient execution of the duties involved. You can put your mind at rest regarding obhgations which mean much, not only to you, but to those whose welfare you have at heart. Permanent Protection The Trust Company is not subjected, as is the individual executor, to the temptation to use control of the estate for personal gain. In case of loss individual executors are not always financially responsible, no bond being required of them unless prescribed by the will or imless the will contains certain provisions, in the event of which the law requires a bond. Trust Companies on account of their finan- cial responsibility are not required to give bonds except when ordered by the court, it being well recognized that their assets would be sufficient to make good any loss for which they might be responsible. Personal influences may sway an individual executor. The Trust Company is bound to adhere impartially to the provisions of your will and the law. [18] Naming Trust Company As Executor When this Company acts as your executor your estate will not be delayed in settlement through inexperience. This is apt to be the case when a friend or relative is appointed executor. When Making Your Will That your will should be properly planned, legally and clearly drawn is, of course, of prime importance. This, however, is the province of lawyers. We would advise everyone making a will to consult a competent lawyer. Only the mind legally trained is likely to deal success- fully with the points of law involved. It is advisable, although not absolutely necessary, at the time of making your will, to consult with one of our trust officers. You can then arrange the details of the appoint- ment of the Company as executor or trustee. When this Company is appointed your executor your will may be deposited for safe- keeping in its vaults free of charge. [19] United States Mortgage & Trust Company How Your Personal Property Is Distributed if You Leave No Will If you have not made a valid will the law of the State of New York provides, in general (and without noticing special conditions), for the distribution of the surplus of your personal property after the payment of debts as follows: Married Man Leaving widow and issue — one-third to the widow; two-thirds to the issue. Leaving widow and no issue — one-half to the widow; one-half to his next of kin. Married Woman Leaving husband and issue — one-third to the husband; two-thirds to the issue. Leaving husband and no issue — the whole to her husband. Unmarried Man or Woman The whole to his or her father; if the father is not living to be equally divided between mother, brothers and sisters of the deceased. [201 Distribution of Property Persons thus benefiting may not be those whom you wish to receive your property. The law is inexorable. It is not concerned with what your wishes might have been in case of your death without making a will. If, on the other hand, you make a valid will, this is in effect a law in itself. It must be obeyed and you are then sure to have your wishes carried out with precision. The most certain way to insure its provisions being faithfully carried out is to appoint the Trust Company your executor. [21] United States Mortgage & Trust Company The New York State Inheritance Tax The State Inheritance Tax is imposed upon the transfer of property bequeathed and devised by will or transferred under the in- heritance laws of the State. The amount of the tax is determined by the State after ascertaining the assets and liabilities of the decedent. The United States Mortgage & Trust Company is constantly called upon to act as executor or administrator. It is thus fully informed on all details relating to this tax, and in a favorable position to attend to the necessary formalities. Rates of Taxation on Inheritances The following are the tax rates fixed by the State of New York on the transfer of property, real or personal of a decedent: — When the transfer is to father, mother, husband, wife or child (including legally [22] Taxation on Inheritance adopted children, except that as to them a transfer of over $5000 is taxable on the whole amount) the tax is as follows : First $5000 exempt Next $25,000 at 1% Next $75,000 at 2% Next $100,000 at 3% All above $205,000 at 4% When the transfer is to a lineal descendant, and does not exceed $500 in value, it is not taxable. If over $500 it is taxable on the whole amount, as follows: First $25,000 at 1% Next $75,000 at 2% Next $100,000 at 3% All above $200,000 at 4% When the transfer is to brother, sister, wife or widow of son, or husband of daughter, or, under certain conditions to a foster child who has not been legally adopted, and it does not exceed $500 in value, it is not taxable. If over $500, it is taxable on the whole amount, as follows: First $25,000 at 2% Next $75,000 at 3% Next $100,000 at 4% All above $200,000 at 5% [23] United States Mortgage & Trust Company When the transfer is to any other person than those above enumerated, or to any cor- poration (except reUgious, charitable, and certain other corporations, which are exempt) and does not exceed $500, it is not taxable. If over $500 it is taxable on the whole amount as follows: First $25,000 at 5% Next $75,000 at 6% Next $100,000 at 7% All above $200,000 at 8% Protecting Your Interests In its care for the interests of an estate and the beneficiaries of a will in respect to this tax, the United States Mortgage & Trust Company has a definite advantage over the individual executor. Its thoroughly equipped business organization — its systematic book- keeping — its carefully supervised records — furnish insurance against errors and over- sight. The Appointment ut An Administrator The Administrator A man is said to have died "intestate" if he fails to dispose effectively of his property by will. Under such circumstances the law provides that an "Administrator" shall be appointed by the Court to administer the estate. When the appointee is a woman she is known as the administratrix. The law also provides for the appointment of an Administrator if there is a will, but no executor is named, or if one is named but fails to qualify, such an administrator is called "Administrator with the Will Annexed," or Administrator c. t. a. (cum testamento annexo). An administrator proceeds in much the same way as does an executor. He distributes the estate to the persons lawfully entitled thereto. The Trust Company is available for appointment by the Court as administrator upon petition of a relative or others entitled to inherit the estate. 25 II PERSONAL TRUSTS United States Mortgage & Trust Company What are Personal Trusts? Personal or "individual" trusteeships are commonly grouped in two classes: 1. Trustee under Will. Such a trust is created by Will and is made to operate after death. 2. Trustee under Deed or Agreement. This form of trust becomes active during one's hfetime. It is sometimes called a "Liv- ing" or "Voluntary" trust. By the creation of a trust you can set aside, for the period allowed by statute, real estate or personal property for the benefit of your wife or children, or other persons, for an institution, a charity or any special object, and, in the case of a living trust, for yourself also. A trust fund enables you to protect property against waste in inexperienced hands. 128 1 Trustee Under W i ] 1 The Parties to a Trust The maker. The person or Trust Company who holds the property and carries out the provisions of the instrument creating the trust, who is called the Trustee. The person who receives the income from the trust fund or otherwise benefits by its provisions, who is generally called the Bene- ficiary. The Trust Company as Trustee Under Will When you make a will you may find it desirable to place part or all of your property in trust. This may be because you want the estate or funds to be managed in a certain definite way, because you want the income devoted to some special purpose, or desire to relieve your widow, or daughter, or some other person of the care of the property. The trustee named in your will, if he quali- fies, invests the trust funds, or manages United States Mortgage & Trust Company the estate, and applies the income as the will directs. When the Trust Company is appointed executor of a will which creates a trust, it is also customary to appoint it the trustee of such trust. The United States Mortgage & Trust Com- pany as trustee under a will assures to your estate and to the beneficiaries under the will the advantage of a businesslike management, exact accounting, and the trained knowledge of men of wide business experience. It also affords safety and economy. The appointment can be made by the will itself when it is executed, or it may be made by a codicil to an existing will. As above stated in the case of an executor, if desired, a relative or friend may be appointed co-trustee with the Trust Company. [30] Trustee Under Deed or Agreement Trusts in Force During the Life of the Maker By deed or agreement you can create a trust during your life, see it in operation and reserve to yourself the right to revoke or modify it to suit changing family or business conditions. Purposes for Which Trusts May be Created You may establish a trust to provide an income for a designated beneficiary, for ex- ample, a son or daughter, or other relative or friend or dependent, during his or her lifetime. You may arrange to have the income from the trust paid to the beneficiary for life or until he reaches a certain age, or the happen- ing of some contingency. The deed may provide that so much of the income as is necessary shall be applied for the maintenance, support and education of a child, and that the balance shall accumulate until the child becomes of age. [31] United States Mortgage & Trust Company You may arrange to have the income of the trust paid to yourself at stated intervals during your life, the principal to go to others after your death. You may provide that upon the termina- tion of the trust, the estate itself shall be distributed in any lawful way you may wish to specify. You may create a Trust for the benefit of some charity in which you are interested. Such trusts are frequently made in perpetuity. As trustee under deed or agreement this Company is in a position to serve you in a great variety of ways. The right reserved to make modifications in the agreement makes it possible to adapt it to your special purposes. [32] Advantage of Voluntary Trusts Some Advantages of Voluntary Trusts Such trusts are a wise application of the maxim, "In the days of prosperity provide for days of adversity." They are also an excellent means of carrying out benevolent plans, or providing for relatives or others. They are frequently used in case of marriage settlements. A father may thus, for example, provide an income for his married daughter thus rendering her financially independent of her husband. The creator of such trusts is saved the trouble of attending to the making of regular payments or collecting income. [33] Ill GUARDIAN COMMITTEE CUSTODIAN United States Mortgage & Trust Company The Trust Company as Guardian To make wise provision for the care of pro- perty of a boy or girl under age left without a natural protector is one of the serious ques- tions which may be involved in the making of a will. How Appointed The United States Mortgage & Trust Company may be appointed as Guardian of the property of a minor by the Court upon the application of some relative. Guardianship in the case of a minor comes to an end when the ward becomes of age. [36] As Guardian Duties The Guardian of the property of the ward does these things: Makes investments according to law. Makes disbursements when necessary for maintenance, support and education of the ward. Keeps accurate records of all receipts and disbursements. Accounts annually and also finally when the ward becomes of age and is entitled to the management of his or her property. [37] United States Mortgage & Trust Company The Trust Company as Committee of the Estate of an Incompetent The Trust Company is often appointed Committee of the property of lunatics, habit- ual drunkards and other persons adjudged incompetent to manage their property. This appointment is made by the Court. It is customary, however, for the court to con- sider the wishes of relatives or those applying to have the appointment made. The life of a trust in such a case varies according to the special circumstances. Where a person is of unsound mind, for instance, it would depend upon the beneficiary's being adjudged competent to manage his own affairs. [38" As Custodian The Trust Company as Custodian Under this service the Trust Company provides vaults for the safekeeping of stocks, bonds and other securities, attends to the collection of coupons, interest and dividends and takes care of a number of other details involved in the management of property. Your income may be either credited to your checking account or checks mailed to you, as you prefer. The Trust Company as custodian relieves you of the trouble of making out income tax certificates, of the collection of mortgage interest, the collection of rents, the inspection of real estate, and of periodical visits to a safe deposit box. The fees are small. The custodian service ofifers an inexpensive way of securing relief from the trouble of attending to financial details. These can be better looked after by a business organization equipped with a perfected accounting system and the necessary technical knowledge. This service is especially advantageous to men and women who have not had the benefit of training in business matters, or for the traveler or business man absent for extended periods. [39] United States Mortgage & Trust Company As Treasurer of a Corporation The Trust Company may act as treasurer or assistant treasurer of clubs, societies, churches, hospitals, and other corporations. Those charged with the care of funds are thus relieved from attention to a multitude of responsibilities and annoying details. How Investments are Protected The investment of trust funds by this Com- pany is made under the direction of a Trust Committee of the Board of Directors of the Trust Company. Such Committee meets frequently and supervises the purchase and sale of all securi- ties relating to Trusts. The beneficiary of a trust fund thus profits by the sound judgment of a group of invest- ment experts. [40] Legal Investments Trust Funds Kept Separate As Executor, Administrator, Guardian or Testamentary Trustee, the Trust Company keeps the trust investments separate and dis- tinct from its own assets and those of any other estate. Uninvested trust funds are, by law, pre- ferred deposits. Legal Investments Under wills, deeds of trust, etc., the Trust Company is often empowered to make invest- ments for the benefit of beneficiaries. As a safeguard the law authorizes the investment of trust funds in certain securities. These are: 1. Loans on unencumbered real estate situated in New York State not exceed- ing two-thirds of the appraised value of the property. 2. U. S. Government and certain State and Municipal Bonds. 3. Certain Railroad Bonds specified by statute. [41. United States Mortgage & Trust Companj' Provision for Special Investments The maker of a will or deed of trust, how- ever, can therein provide that the Trust Com- pany as trustee may make investments other than those authorized by the law. Information as to Investments The Officers of this Company welcome at all times the opportunity of assisting clients in securing information regarding investments. 142] IV ADVANTAGES OF TRUST COMPANY SERVICE United States Mortgage & Trust Company A Summary of Trust Company Advantages Which Should be Kept in Mind Trust Company Service is Safe. Supervised by the State. Examined by the Clearing House. Managed not by one man but by a Board of Directors and Officers — a group of substantial business men trained in finance. Its reliability is insured by adequate cap- ital and surplus. Does not endanger the trust by dishonesty or failure, or by personal inexperience, or caprice, prejudice or neglect, or by becoming incompetent. Provides systematic bookkeeping. Renders an accounting at regular intervals. Trust Company Service is Economical Saves expense of safe deposit box. Saves expense of surety bond. Saves fees for special advice. Saves unnecessary personal expenses. [44] Trust Company Advantages Trust Company Service is Convenient The Trust Company has a permanent ad- dress. It can always be found. The United States Mortgage & Trust Company's three offices are all accessibly located in New York City. Consultations Welcomed The Trust Department of the United States Mortgage & Trust Company is a distinct branch of its business. It is in charge of men long trained in this special field. They are well informed on the many intricate questions arising in trust matters. The Trust Officers or either of the branch office Managers are always available to discuss with you any point in connection with per- sonal trusts about which you may desire information. This may be a matter of mere business routine or a complicated problem. Do not consider it too trivial or too difficult to be presented. Questions by mail will receive careful attention and prompt replies. [45] United States Mortgage & Trust Company Safety for Your Valuables Convenient facilities for the safekeeping of valuables are provided by the vaults of the United States Safe Deposit Company which adjoin all offices of the United States Mort- gage & Trust Company. Equipment These modern vaults are fully equipped with the most approved devices for safety and convenience. Special vaults with private rooms are at the service of those who wish to use them. Good light in the vaults and coupon rooms is secured by their location on the street level. Charges Boxes may be rented for $5 per year and upward. Trunks, packages and boxes are stored at prices ranging from fifty cents per month and upward according to size and valuation. The Company's private delivery automobile in charge of special guards will call for or deliver articles promptly upon request. [46 1 HG 1*319 e8 U58 Author Vol. US mortgage 85 trust co, NY Title Copy The admin of estates & trusts Date Borrower's Name