Evening star., 1938-01-02
TRUST SERVICES
GROW STEADILY
Estate, Inheritance Taxes
Popu|arize Methods of
Protecting Property.
BY Cambridge Associates,

oS SdIHoTlQge Associates.
Current conditions are giving trust
companies and trust departments the
impetus for an unprecedented rate
OF growth. Statistics indicate that
the volume of trust assets has been
growing steadily during the post-de-
preston period at the rate of nearly
per cent year, and the combina-
ton Of circumstances now prevailing
is undoubtedly accelerating this trend,
according to competent authorities.
Foremost factor in the public's in
creasing dependence upon corporate
trusteeship has been the property
owners growing fears concerning the
effects of State and national taxa
ton upon his estate. The transfer
OF an estate from one generation to
the next has always been held ex-
pensive. Larger estate and inheri-
tance taxes naturally increase the ex-
pense and increase the desire to adopt
methods which will assure the trans
fer of an estate with least possible
loss.
DupnCate costs Avoided.
From this consideration has come
the more widespread use of the trust
to avoid, whenever possible. a second
and unnecessary set of taxes. legal
expenses and administrative charges.
Thus it is a much more common
practice nowadays for a man to leave
property in trust for his wife, for in
stance. and arrange upon her death
for the trustees to distribute the estate
to surviving children, to favored char
tiles or however else he desires. Such
provision eliminates one complete set
of costs and brings the ultimate heirs
a substantially larger net estate than
would otherwise remain.
Also from the same desire to avoid
excessive depletion through taxes is
the spreading practice of setting up
irrevocable trusts before death for
children, other relatives or charities.
Property passed in this manner is SUBJ
ject to the Federal gift tax and State
gift taxes where they are imposed,
but such taxes are appreciably smaller
than the Federal and State taxes
which would be imposed upon estates
and inheritances after death. Numer-
GUS wills of the very rich and the mod
erately wealthy probated during the
last year testify to the growth of this
method.
Low Yields Available.
A retarding influence both to the
growth of the use of trust service and
the income trust institutions has been
the low yields available on seasoned
securities. While the principal OF each
trust is invested separately and ac-
cording to the wishes of the creator
of the. trust, if expressed, a compos-
lite picture of trust fund investments
reveals a portfolio like this accord
ing to recent survey: Twenty-one
per cent in Government obligations,
IL per cent in real estate mortgages,
81 per cent in corporate bonds, IL
per cent in State and municipal bonds,
S per cent in preferred stocks and 13
per cent In senior equities.
While the interest and dividend re-
turn on all these classes of securities
is still at low rate compared with
pre-depression standards, the increase
in yield in most categories is now
considerable as compared with year
ago. All factors point. therefore, not
only to further growth in total VOL
ume of business handled but to a
better situation profit-wise for trust
institutions and trust departments
than has obtained for several years.