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Who’s Keeping an Eye on Your 401(K) Plan?

April 19, 2018

Filed under: Fiduciary Duties — Neel Shah @ 9:15 am

Have you ever wondered who is responsible for reviewing your 401(k) plan and ensuring that it is working for you? More than 54 million people across the United States rely on their 401(k) plan as their primary method to save for retirement, but many plan participants don’t know who’s responsible for managing it and how to use it the most effectively. 

Identifying who is responsible for your 401(k) plan can help give you greater clarity about working towards your retirement goals. A 401(k) plan, simply put, is a special purpose trust identified by your employer to help you save for retirement. This is overseen by one or more individuals known as plan trustees.

These plan trustees are legally responsible fiduciaries that must make sure that the 401(k) plan operates for the benefit of the plan participants and the participants’ beneficiaries. Furthermore, the plan trustees have to verify that your plan complies with the requirements of the Employee Retirement Income Security Act, which requires that every plan participant is treated fairly. A formal written document should be included with your 401(k) plan about how the plan does operate and the summary plan description can also be a valuable piece of information to review.

Bringing this information to your meetings with your financial planner or your estate planning attorney can help position you to better understand how this will protect your future.

 

What You Need to Know About Basic Fiduciaries for Your Estate Plan

March 21, 2017

Filed under: Fiduciary Duties — Neel Shah @ 9:15 am

Your estate planning documents will put together numerous roles where other individuals will step in and have responsibilities on your behalf. One of these is the executor. The executor is responsible for the gathering of information regarding your assets after you pass away, handling all tax responsibilities and then distributing those assets for you. Besides the executor, however, there are several other people who might play a key role in determining how to handle your assets or estate plan while you are alive or after you pass away. You need to know the distinction and also ensure you have selected someone for each of these roles appropriately. This is a crucial step in comprehensive estate planning for your individual or business needs.

A guardian is an individual who is responsible for the physical and regular care of your minor children if something were to happen to you. An agent, on the other hand, is a person who is appointed to manage your assets or make decisions on your behalf if you are unable to do so as a result of incapacitation or disability.

A trustee, on the other hand, manages and invests trust assets by distributing them in accordance with the terms of the trust you created. He or she is also responsible for filing all necessary tax returns. There may be multiple fiduciaries assisting with the management of your estate plan. Identifying the right people is extremely important as they should be both capable of handling this and willing to do so. Consulting with an experienced estate planning attorney can help you understand how these different roles will intersect and play a role if something happens to you while you are alive or after you pass away.

 

Court Finds that J.P. Morgan Mishandled Trust, Orders $18.1 Million Payout

October 24, 2012

Filed under: Fiduciary Duties,Trusts — Neel Shah @ 8:00 am

An Oklahoma judge has recently held that J.P. Morgan & Chase Co.’s administration of the Carolyn S. Burford trust was “grossly negligent and reckless.” As a result, the court ordered J.P. Morgan to pay the trust $18.1 million, as well as punitive damages and legal fees.

English: Category:JPMorgan Chase

According to a recent article in the New York Times, the order for monetary damages came after the Tulsa County Judge found that J.P. Morgan breached its fiduciary duties in handling the trust account. In 2000, J.P. Morgan sold variable prepaid forward contracts to the trust. The court determined that this sale was a breach of fiduciary duty. Not only did the bank fail to ensure that the client understood what the product was, but it also failed to disclose the fact that the transaction was beneficial to the bank. The court further found that the bank was “double dipping” when it used the proceeds from the contracts to further invest in it’s own investment products.

Current law requires that brokers handling trust accounts act in the best interest of the client. According to J.P. Morgan spokesperson Douglas Morris, “We disagree with the court’s decision and will take all appropriate measures to respond, including appealing the decision.”

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