Q&A With Anne Paape, Managing Director and Senior Fiduciary Counsel at Cresset

The Spotlight had the pleasure of sitting down with Anne Paape, managing director and senior fiduciary counsel at Cresset and Cresset Trust Company, to talk about the historic transfer of wealth many countries are undergoing, how Cresset helps clients navigate those challenges, and why she is doing the “polar opposite” of what she thought she would do when she went to law school.

Spotlight: Was this the role you planned on when you went to law school?

Anne Paape: This is the exact opposite of what I planned. My mom is a CPA and worked in the personal tax and trusts and estate world, and I wanted nothing to do with it. I wanted to be a criminal-defense attorney. I was going to work on death-penalty cases — work with the Innocence Project. But I ended up working for Judge [Margaret] Marrinan in probate court in Ramsey County one summer, and I loved it. After law school, I went to a small firm where I did some criminal defense and family law cases, but also did some estate planning and came to realize that was the favorite part of my day. In order to do higher-end and more sophisticated planning, I went to a larger firm for about 12 years. And from there, I came in-house to Meristem Family Wealth. They had just started a trust company and wanted someone with fiduciary and planning chops to give it shape and give them more credibility with both business development and regulators. After Meristem was acquired by Cresset in 2022, my role expanded, but my family law, criminal law, and planning experience still comes into play, as even high-net-worth clients face these types of issues, and I can help navigate them through them or call on my rolodex to find them the help they need.

Spotlight: Describe your role at Cresset now.

Anne Paape: I work in three different parts of the organization. First, my biggest role is to help drive business and run the trust company in South Dakota. Second, I still work with clients in our wealth strategies division. There, I bring my expertise in helping them with estate planning, navigating litigation, estate administrations that are complicated, or go through a divorce or prenup process. And third, I sit on our legal team. As part of that team, I participate in due diligence if we are doing an M&A transaction, particularly if they involve a trust company or some regulated piece of the industry where I can provide value.

Spotlight: Describe Cresset’s sweet spot when it comes to its ideal clients.

Anne Paape: We are really a great fit for a broad spectrum of clients. We have 18 offices across the country and offer flat and assets under management-based fees. Our two founders were hugely successful in private equity. In retirement, they could not find the kind of comprehensive services and investment options that they needed, so they decided to create an organization that would provide their families, and families like theirs, what they envisioned. As a result, we are very business-owner friendly. Our founders understand what it is like to have years without a lot of traditional liquidity and to not have access to the level of sophisticated advice they needed because of AUM minimums.

For example, we have a specific program called Cresset Catalyst, geared toward pre-transactional professionals — those who run a business but haven’t had their first liquidity event yet, but will soon. We have people on staff who can help them plan for the exit, think through structuring a deal, tax impacts, put them in touch with investment bankers or attorneys, help them evaluate their first letter of intent, prepare pre-transaction estate plans, and understand the waterfall and what that will mean for them post-transaction. The kind of tax planning and practical planning that entrepreneurs really need. Similarly, our sports and entertainment practice can provide the complex planning and support an athlete needs, while they may have less AUM than would allow for that level of planning elsewhere. Both of these programs are typically structured as flat-fee engagements.

On the more traditional side of our business, we become especially valuable to those families with investable assets between $40 million and $500 million, but we also have clients far in excess of that. We lead with high-class investments and comprehensive family office services (think planning, tax, governance, bill pay, etc.). We have investment capabilities that are as sophisticated as they get. We don’t just offer stocks and bonds, but private equity opportunities, real estate investments, coinvests, qualified opportunity zone funds — really all the investment options that the most sophisticated of investors need in their portfolios.

Spotlight: Cresset has a trust company in South Dakota, as you mentioned. Why do so many clients want trusts established there?

Anne Paape: South Dakota is to trusts as Delaware is to corporations — it is an elite trust jurisdiction. Because the jurisprudence in South Dakota has been around for about 30 years now, we know what works and what doesn’t — what will pass an audit by the IRS, for instance. It has the strongest domestic asset-protection laws. There is no state income tax. And anything that goes to court is sealed and private until it goes to the Supreme Court. Those appear to be the core drivers that bring people to South Dakota. South Dakota also takes their regulatory role incredibly seriously, so that gives me (and our clients) complete confidence that we’re administering our trusts in a way that would withstand any scrutiny. This is not necessarily the case in some other states enacting laws simply trying to drive more trust business there.

Spotlight: What do you see are some of the biggest challenges for individuals and families as they navigate these wealth transfers?

Anne Paape: Over the past 10 years, when this transfer of wealth really started to increase, we have experienced these three challenges the most. First, some families have unrealistic expectations about what is coming. Sometimes, parents have limited what their children will receive from their estate, or, on the other extreme, they are expecting their children to run a foundation or a family business that they have no knowledge of and are not prepared for. Or funds have diluted over generations without adequately preparing the generation that won’t have as much. Similarly, there is often a complete lack of transparency. One generation does not want the next to know the extent of their wealth or what the plans are for it. This can create challenges when the next generation is surprised or has questions with no one left to provide answers. And third, we often see messy planning — even with very large, otherwise sophisticated estates. It is not uncommon for us to see wealthy families with documents from decades ago, and they have not consulted with their estate attorneys for years, and there often has not been proper titling to effectuate their plan. Or they had very aggressive planning that has fallen out of favor and now carries risks if it isn’t fixed. It can be a real mess that is sometimes only unearthed when someone dies. Or when a firm like ours gets involved.

Spotlight: How does Cresset help its clients with these challenges?

Anne Paape: We have a whole department that oversees family governance and education and can help with disputes, but we would rather have them help with education on the front end and avoid the disputes altogether. They are honestly some of my most talented teammates. In addition, our wealth strategies team often sorts out the actual planning pitfalls and can work with the family to put stronger planning in place or just to understand the plan they have. We also have thousands of clients where we can say, “Well, we’ve seen other clients deal with this, and this is how they dealt with it.”

If there is an active dispute going on, we can serve as a support team, whether we’re helping gather documents or helping them navigate and understand what a complaint says. We can also interface with their lawyers, review legal bills, and serve as an educated go-between.

It’s really important that our clients have a multidisciplinary team that is looking out for them. And Cresset is designed to provide that to our clients. I can’t imagine offering comprehensive wealth management any other way after being here.

Cresset refers to Cresset Capital Management and all of its subsidiaries and affiliates. Cresset Asset Management, LLC, also conducting advisory business under the name of TRUE Cresset Sports and Entertainment, provides investment advisory, family office, and other services to individuals, families, and institutional clients. Cresset Partners, LLC, provides investment advisory services strictly to investment vehicles investing in private equity, real estate and other investment opportunities. Cresset Asset Management, LLC, and Cresset Partners, LLC, are SEC registered investment advisors.