Those looking for favorable tax laws and flexible options for creating and operating trusts have historically gone to states such as South Dakota, Delaware or Nevada. But with new trustee laws and the phase-out of the so-called Hall income tax on unearned income, Tennessee has emerged as one of the top states for trust formation and services.
Eager to tap into the state's more favorable investment rules, one of Atlanta's top CPA firms has opened a new trust business in Chattanooga, which organizers hope will grow into multi-office business to offer individualized and independent trust administration services for high-net-worth individuals and families.
Known as Magnolia Trust, the new business opened on October 9 in the Volunteer Building in downtown Chattanooga as the 15th state-chartered trust company in Tennessee.
Organized and owned by the shareholders of Moore Colson CPAs in Atlanta, Magnolia Trust is the only Tennessee-chartered trust company that was founded on the expertise of certified public accountants and attorneys. As an independent trust not affiliated with a bank or other investment company, Magnolia is also unique in focusing solely on trust administration to provide independent guidance and management.
"What Magnolia offers is a balanced approach between traditional and cutting-edge trust administration techniques," says Eric Ratliff, an attorney and accountant who specializes in trusts and who relocated to Chattanooga this spring to become president and CEO of the new Magnolia Trust Company. "We look forward to serving the region by providing insightful, vigilant dynastic trust planning strategies for our clients and having a meaningful impact on the myriad of income and estate tax issues."
Bert Mills, managing partner of Moore Colson CPAs — a 38-year-old accounting and advisory company in Atlanta with more than 150 accountants — said the new trust company offers many of the clients of Moore Colson a more effective way to manage and transfer their assets to the next generation. The partners of Moore Colson have capitalized Magnolia Trust, and Mills is serving as its chairman.
"At Moore Colson we specialize in some pretty large family-owned businesses and in doing a lot of strategic succession planning in the second and third generation, we are often asked to act as a trustee," Mills says. "That was the Genesis for this business and we've been working with the Tennessee Department of Financial Institutions for the past year and a half to create the charter for Magnolia Trust and we're excited to start this business and to be able to provide this service."
Ratliff said the state trust regulations and tax laws are the most favorable in the Southeast in Tennessee. Too, Chattanooga is well-positioned geographically just north of Atlanta to be able to help support other accounting, investment and finance companies in Atlanta and other Southern cities.
In addition to Ratliff, the new Magnolia Trust office in Chattanooga is also staffed by Rhett Zeigler, a trust officer for the past 15 years who is joining Magnolia as vice president and director of fiduciary services. There are also three other para-professionals.
Magnolia also is applying for permission to open a trust service office in Atlanta and another office in South Dakota, Ratliff said.
"Tennessee has done a spectacular (job) to make sure that this is a top state for trust law and to work with the trust companies that are in Tennessee so (we can) compete with any other states in administering trusts and helping clients to have their trusts here," says Ratliff, who previously operated trusts as an attorney in Knoxville.
Zeigler said Magnolia will take a client-centered approach to helping individuals and families achieve their goals to create long-lasting legacies. The team works with clients' investment managers, CPAs, legal counsel, insurance professionals, valuation consultants, bankers and other advisors to provide strategic, coordinated collaboration and trust administration. As independent advisors, Magnolia works alongside the client's existing team of advisors to develop and execute dynastic trust planning strategies with an emphasis on tax planning.
"At Magnolia, we provide clients with thoughtful, transparent services," Zeigler says. "As a fiduciary, we have one goal: We place client interests above all else, preserving legacies for generations to come."
State chartered trusts with Chattanooga offices
Among the 15 state-chartered public trusts established in Tennessee, three are headquartered in Chattanooga and three others based elsewhere operate offices in downtown Chattanooga.
* Advocacy Trust LLC, in the Liberty Tower at 605 Chestnut Street, suite 340
* Magnolia Trust Company in the Volunteer Bank Building at 832 Georgia Avenue, Suite 410 in Chattanooga
* Southeastern Trust Company LLC, in the Krystal Building at 100 W. Martin Luther King Boulevard, suite 600
* Cumberland Trust and Investment Company, headquartered in Nashville with local office in the Republic Centre building at 633 Chestnut Street, in Chattanooga
* Pendleton Square Trust Company, based in Nashville, operating in Chattanooga in the Volunteer Bank building at 832 Georgia Ave., Suite 210
* The Trust Company of Tennessee, based in Knoxville, with Chattanooga office in the Volunteer Bank building at 832 Georgia Avenue, Suite 505
Source: Tennessee Department of Financial Institutions