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Trust management is a complex field, and there’s no “one size fits all” solution to effectively managing your organization’s trust. Each organization and trust manager must take into consideration a myriad of factors to determine the best course of action. However, there are a number of trust management best practices that can help you succeed in this field. These strategies will help you to maintain a healthy and balanced relationship with your users and stakeholders, as well as an effective governance model.
As with any other business activity, the safekeeping of customer assets must be reconciled against the customer trust account monthly. This helps to ensure that the assets held within the safekeeping account are sufficient to cover future liabilities. In addition, it allows the trust account custodian to perform an accurate, monthly reconciliation of funded assets versus liabilities. This is a helpful check on the account’s activity, as well as a process for catching any errors. The best way to reconcile accounts is with an online service. These services are often easy-to-use, secure, and reliable. They’re also a great way to minimize the risk of human error. Trust account reconciliations should be performed by the custodian, and any discrepancies should be flagged for follow-up by the legal counsel. Finally, if the data doesn’t match the account statement, it’s a good indication that a reconciliation should take place.
Physical inventories of assets, including safe deposit boxes, hold-alls, and vaults, are an important part of maintaining a healthy portfolio. A physical inventory helps to identify any issues with your assets, such as missing boxes or keys. If your portfolio is large enough, this process can also help to identify any under-inflation issues with your assets. In addition, it can help to identify any issues with your asset tracking system, such as issues with the asset registration system or bad data entry. Physical inventories can be performed by an internal team that has experience with safekeeping, or contracted service. The best practice is to perform the inventory at least once a year, especially if your assets are large or your business is growing.
Another important trust management best practice is the maintenance of a blank check stock under dual control. This means that the trust account custodian has two signed checks on file, one from the account owner and one from the account custodian. This helps to ensure that the account is compliant with applicable laws, such as the Gramm-Leach-Bliley Act, or laws governing the prudent maintenance of bank accounts. If the account is ever frozen or seized, the custodian can present the second check and the account owner can vouch that they had control over the funds. In addition, a blank check stock helps to prevent fraud. This can be done through a number of methods, including the use of fraud prevention software, or the use of multiple signatures on the check. A blank check stock can be maintained with a number of different software packages, including online formats.
In addition to the trust account’s basic operations, it’s also important to maintain robust internal controls over trust account discretionary distributions. This includes the approval process, as well as the approval documentation. If the account owner is approved to make a distribution, it must be done through the account custodian. It must also be signed by the account owner and approved by the account custodian, including any documentation supporting the distribution. Finally, it should be reported the same way that other distributions are reported, in accordance with SEC rules. This best practice is necessary to ensure that any distributions that are made are compliant with applicable laws and regulations. It can also help to prevent fraud. As with all trust best practices, it’s important to perform internal controls over trust account discretionary distributions.
A listing of approved funds and stocks is a list of funds that have been approved for investment by the trust account custodian. This helps to ensure that the funds that are approved for trading are appropriate. It also helps to prevent unauthorized trades. The listing can be maintained electronically, and it can be updated manually. It’s also a good idea to keep a list of the stocks that have been approved for investment by the trust account custodian. This can help to prevent unauthorized trading, as well as to prevent stocks that are inappropriate for the trust’s portfolio. A listing of funds and stocks is a basic best practice that can help to ensure that your trust management model is sound.
It’s also a good idea to maintain an approved listing of broker-dealers that have been used to execute trades on the trust account. This helps to ensure that the broker-dealers that have been used have been approved by the trust account custodian. In addition, it’s important to review this listing regularly. This helps to ensure that the broker-dealers that have been used for trades are still valid and approved. It can also help to prevent unauthorized trades or improper distributions. A trust account listing, as well as a listing of the approved broker-dealers, is a best practice that can help to ensure that your trust is in good hands.
It’s important to obtain written approval from each of your co-fiduciaries before making a distribution from the trust. This helps to ensure that each fiduciary has approved of the distribution, as well as that it’s compliant with applicable laws and regulations. It can also help to prevent fraud or other improper activity. It’s important to note that written approval is not required for operating expenses, such as salaries, or for operating loans. However, distributions of capital assets, such as stocks and bonds, are required to be approved by a majority of the co-fiduciaries. If you’re managing a family trust, this is especially important. Each of your co-fiduciaries must be informed of the trust’s activities, and they must sign off on any distribution decisions. This helps to ensure that each fiduciary’s interests are protected, as well as that the trust is compliant with applicable laws and regulations.
Finally, trust account operations can also be monitored with periodic reports. These reports can be generated either by the trust account custodian or by an independent third party. They can be used to determine the trust’s activity on a regular basis, as well as to detect any issues or irregularities. These reports can be generated for a number of different metrics, including the trust’s activity on the stock market or on a particular asset, as well as the trust’s activity on a particular investment fund. It’s also possible to create reports on the activities of the trust’s investment portfolio, such as the fund’s performance and the fund’s risk profile.