Regulator Panel

Diana BrannonTrust Examination SpecialistFederal Deposit Insurance CorporationSan Francisco, CA

Regulator Panel - FDIC

Scott on Trust or Restatement of Trust

16 Duties of a Trustee

How do they effect a trust

officer’s daily life, and what

are common regulatory findings?

Regulator Panel - FDIC

1 - Duty of Skill and Care

Documentation, documentation, documentation

Policies, policies, policies

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2 – Duty of Loyalty

Conflicts of interest with affiliates Own-bank stock and products Receipt of undisclosed fees

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3 – Duty Not to Inappropriately Delegate

Uniform Prudent Investor Act – appropriate delegation

Deferral to co-trustees

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4 – Duty to Keep and Render Accounts

Operations

5 – Duty to Furnish Information

Beneficiary access

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6 – Duty to Keep Trust Property

Separate Crumbling “Chinese Wall”?

7 – Duty to Keep and Control Trust

Assets Controls over personal property

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8 – Duty to Make Trust Assets Productive

Initial investment review Annual review process

9 – Duty to Pay Income to Beneficiary

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10 – Duty to Deal Impartially with

Beneficiaries

Poor documentation Appearance of favoring current beneficiary

over remainder beneficiaries

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11 – Duty with Respect to Person

Holding Power to ControlReceiving directions

12 – Duty with Respect to Co-TrusteesNo action is an action

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13 – Duty to Defend Actions Defense costs

14 – Duty to Use Reasonable Care in

Performing All Actions Risk management starts at the door

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15 – Duty to Review and Enforce ClaimsShareholder class action lawsuits

Additional fees for collection should

not be charged to fiduciary accounts

16 – Duty to Preserve Trust Property Vault controls

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Self-Directed IRAsNot “just a custodian”

Internal Revenue Code Section 408(h)For purposes of this section, a custodial account shall be treated as a trust if the assets of such account are held by a bank (as defined in subsection (n)) or another person who demonstrates, to the satisfaction of the Secretary, that the manner in which he will administer the account will be consistent with the requirements of this section, and if the custodial account would, except for the fact that it is not a trust, constitute an individual retirement account described in subsection (a). For purposes of this title, in the case of a custodial account treated as a trust by reason of the preceding sentence, the custodian of such account shall be treated as the trustee thereof.

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IRS imposes duties upon IRA custodians that cannot be waived by customers

Valuation Fair market value reporting requirement for Form 5498

Prohibited Transactions Policies and procedures Identification and appropriate actions

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Other IRA IssuesReal EstateLPs/LLCsNote ReceivablesUBTI

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Regulation R

Applies to all banksBank wide assessmentCustody accounts excluded from

relationship compensation test

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QUESTIONS? COMMENTS?