ITA Quarterly Newsletter - May 2020

October 26, 2021

Greetings [FIRST]:

ITA President's Message

Craig Schrader, Vice President Trust, West Bank and President of the Iowa Trust Association

Talk about a difficult couple of months; 2020 has certainly had two of them already.  We are all operating in somewhat uncharted waters these days. Let’s hope we’ll all be allowed to return to a “normal” routine sometime reasonably soon.

The ITA recently had the spring peer group discussion via Zoom, which was somewhat challenging, albeit a success overall.

One of the first topics was how various trust departments are staffing in light of the pandemic. many of the larger departments were either: (1) dividing staff members into two teams and having the teams report to the office on an alternating basis or (2) using skeleton staffing with just a few designated staff members reporting to the office.  Smaller departments seem to be having staff members show up at the office, because there is really no alternative.

Everyone seemed to agree speed of the recent stock market decline was unprecedented, which made it difficult to deal with. Most departments, however, reported clients had been educated during previous market downturns and, by and large, had not been calling in a panic. It seems communications with clients may be the best way to manage expectations.

Another issue has been how to meet with clients during this period of closed bank lobbies and social distancing. Some banks allow the use of the ZOOM app for meetings but many do not.  There are a number of other virtual meeting platforms being used such as GoToMeeting and Webex. Otherwise an old-fashioned telephone call can always be used.

Most departments have been contacting IRA clients to let them know the CARES Act suspended the required the minimum distribution (RMD) rule for 2020. This change applies to both regular and inherited IRAs.

Another topic discussed was whether departments were willing to act as a “qualified intermediary” for IRC Section 1031 like-kind real estate exchanges. Most departments are willing to do so on a limited basis, but only for law firms they had experience with in the past. At least one department, mine, has discontinued the practice altogether a number of years ago.

In closing I’d like to invite anyone who is not doing so already to become involved with the ITA’s peer group discussions. It’s as easy as contacting ITA's Darcy Burnett, and she will you set up as part of the list of participants.

Trust Briefs: Are Trust Funds for College Athletes on the Horizon? And the importance of one word in a bill introduced in the Iowa Senate

By Eric LeSher, Trust Officer for Raccoon Valley Bank

Trust Briefs is a series of articles and commentary about current topics and issues involving trusts, estates, guardianships and conservatorships.

In addition to being a sports fan, I am actively involved in sports as a wrestling referee. However, what you may not know is that I am the father of a former college athlete. My son played baseball for four years at Grinnell College (Division III) before staring dental school at Iowa in the fall of 2019. Now while I think he is a good looking young man (he gets his looks from his mother, not me) and was a good baseball player, I was under no illusion that some car dealer was ever going to offer him money if he allowed them to use his name, image, or likeness to advertise their cars. However, for those very, VERY few young men and women who possess very special athletic abilities and personal characteristics that would allow them to earn a little money off their notoriety for their participation in college athletics establishing a trust fund for these earnings is OK with me. Trust me, the money their parents spent on camps, lessons, equipment, etc. far exceeds any nominal earnings these select few college athletes will ever earn from the local car dealer.  

Recently, a bill (Iowa Senate File 2058) was introduced in the Iowa legislature which would, among other things; 1) prevent a post-secondary educational institution from limiting a college athlete to receive compensation as a result allowing someone else to use their name, image, or likeness rights, (I am okay with this), 2) prevent a post-secondary educational institution from limiting a college athlete’s ability to hire an athlete agent, financial advisor, or attorney for legal representation (I am of the opinion that allowing a college athlete to hire an athlete agent while in college and competing for their college team is neither necessary or advisable for multiple reasons beyond the scope of this article. However, I do support allowing a college athlete to hire an attorney – they need someone to represent them in contract negotiations with the car dealer after all. As far as allowing a college athlete to hire a financial advisor – I am basically against with one exception. Most college students whether they are athletes or not, are not “rich” and don’t need and should not pay for the services of a financial advisor at that point in their lives. Exception – for that one in a million person who is both “rich” and a good enough athlete to get the attention of the local car dealer – allow them to hire a financial advisor, and 3) allow a post-secondary educational institution’s athletic team’s contract to require a college athlete to deposit some or all of the funds received as compensation for using the college athlete’s name, image, or likeness rights into a trust fund (more on this later in this article).

Trust Fund for College Athlete Concept

The concept envisioned by Iowa Senate File 2058 is long overdue and is one sweeping the nation. College sports, at every level, be it Division I to junior college, brings in a lot of money to colleges and universities be in the form of sponsorships, media rights (Division I primarily) or increased student enrollment numbers (i.e. tuition dollars) (all non-Division I schools). As you may know, there are only six sports (Division 1 football, men’s and women’s basketball, women’s gymnastics, tennis and volleyball) that offer “full ride” athletic scholarships. Most college athletes, 98%-99% of them, receive either no athletic scholarship or nominal “partial” athletic scholarships. Giving not only the star quarterback at the University of Iowa or Iowa State University a chance to earn a little money to be used later in life is fine with me – after all their exploits on the field leads to more money for their universities but just as important, in fact MORE important – is the ability for say a Division III college athlete to earn a little money to be used later in life for their exploits on the field that lead to more money for their college or university. For example, in November 2012, Grinnell College basketball player Jack Taylor scored 138 point in a game. This accomplishment brought a great deal of national media attention, be it short-lived, to not only himself but to Grinnell College. The college benefited financially (notoriety created led to enrollment and tuition dollars) and although Mr. Taylor enjoyed some non-financial benefits, he did not get any financial benefits from his exceptional performance. As a Division III athlete, he received no athletic scholarship funds. It would have been great and equitable if Mr. Taylor had been allowed to earn a few hundred bucks from the local car dealer in Grinnell, Iowa for allowing them to put his picture himself next to a Chevy Tahoe truck on a billboard on Interstate 80 with the words “Score a Tahoe for Christmas’”

Importance of One Word in a Bill Introduced in the Iowa Senate

Section 7 New Section 261I.7 of Iowa Senate File 2058 says in part, “A team contract of a post-secondary educational institution’s athletic program may (emphasis added) require a college athlete to deposit some or all funds received as compensation…, into a trust fund,…”. The use of the word “may” instead of the word “shall” or “must” caught my attention. My first thought – what if the team contract does not mention at all a requirement that funds be deposited into a trust? Is the athlete able to take the money and deposit it into his or her Venmo account? Yes, he will have to possibly pay income taxes on these earnings, but most college athletes would prefer the cash now than wait for it until after they are no longer able to participate. My second thought – If a team contract does not require funds to be deposited into a trust fund, should not a non-athletic scholarship be able to earn money this way just as they are able to earn money by working as a delivery person for Grubhub?  My third thought – should the term “team contract” be defined in the bill? My guess is yes, otherwise a giant loophole may be created. My fourth thought – Will all these “team contracts” need to be amended at some point in time if this bill and other similar ones across the country becomes enacted law? Attorney’s at firms that specialize in education law will be happy for the additional billable hours. My fifth thought – Should the college athlete be a party to the team contract or an amendment thereto or will and can this be incorporated into the athletic or other scholarship acceptance letter / “contract” the athlete signs with the university or college. I have several other thoughts and questions but in the name of brevity will leave you with a final one. My final thought – Who is going to be the trustee for this trust fund(s) – Is your trust department possibly ready, willing and able to serve. As a good trust officer, I thought it prudent to add the qualifier word “possibly”.

It would have been better, at least according to the Federal Rules of Civil Procedure, if the authors of the bill would have used the word(s)or “must” and “must not” instead of the words “shall”, “shall not”, and “may” in their bill. But, further discussion of the proper uses of the words “shall”, “must” and “may” is way too boring for this article and if you went to law school, you probably had enough of that discussion in law school to last a lifetime.

Legislative Tool Helps you connect with Legislators

The Iowa Bankers Association's Legislative Action Center allows bankers to easily contact legislators electronically. Letters on key pending legislation and regulations are posted on the site and can be easily edited and/or personalized for bankers to send to their respective elected officials and regulators at  the state and federal level. The Legislative Action Center is available at the IBA website.

Contribute to the Iowa Trust Association
As a reminder, the Iowa Trust Association (ITA) welcomes contributors to their quarterly newsletter. If you would like to comment on recent activities in the industry or let us know about an upcoming event that would be of interest to our readers, please feel free to contact Darcy Burnett, at (800) 987-7365. Thank you for your interest in our publication and we look forward to hearing from you.

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Iowa Trust Association

If you have any questions, please contact the Iowa Trust Association at 800-987-7365

Darcy Burnett, CMP
Senior Education Coordinator

  Iowa Trust Association
8800 NW 62nd Avenue |  Johnston, Iowa | 50131-6200
(800) 987-7365 |

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