Morgan Stanley Smith Barney can assist corporations in the review of benefit security issues. A popular security device is a grantor trust, commonly referred to as a "rabbi trust." The assets held in a rabbi trust are set aside to make payments due under the plan, but remain subject to the claims of creditors in the event of the corporation's bankruptcy or insolvency.
Change-of-Control/Change-of-Heart Risk
Nonqualified benefits can be protected from change-in-control (takeover) and change-of-heart (repudiation) risks.
Bankruptcy and Insolvency Risk
Any assets set aside in a rabbi trust are subject to the claims of bankruptcy and insolvency creditors. Each plan participant is an unsecured creditor of the employer with respect to the amount of his plan benefits.
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