Trust Department Management Manual

This essential guide provides the "nuts and bolts" for a more profitable trust operation. Clear guidelines and step-by-step explanations demonstrate how to better manage a trust department by using proven techniques, methods, and tools.

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In the face of the growing competition for trust services, trust department managers need to focus attention and resources on making money. The Sheshunoff® Trust Department Management Manual provides clear guidelines, step-by-step explanations, and time-tested techniques and methods to help trust managers run a more profitable and competitive business.

Sixteen comprehensive chapters cover everything the manager and staff need, from identifying new customers to implementing investment strategies. Coverage includes:

•  Where to find new markets and how to reach them
•  How to evaluate new products for profit potential before committing resources
•  Where technology and automation can really save time and money, and mitigate risk
•  How to offer new services without legal and regulatory risk
•  How to apply the regulations to day-to-day activities in a format that the entire staff can use
•  How proper departmental structure can support management and ensure strategic objectives are met

The Sheshunoff® Trust Department Management Manual isn’t an academic treatise. It’s a proven, practical approach to managing costs, improving profits, and staying competitive. The service provides updates and essential, customizable tools — including an extensive collection of Internal Control Questionnaires — for easy implementation of the trust department management program.

Subscribers will receive a downloadable exe file containing editable forms.

eBooks, CDs, downloadable content, and software purchases are noncancelable, nonrefundable and nonreturnable. Click here for more information about LexisNexis eBooks. The eBook versions of this title may feature links to Lexis+® for further legal research options. A valid subscription to Lexis+® is required to access this content.


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Table of contents

Chapter 1 Setting Trust Department Objectives and Organization

Determining Objectives

Strategic and Tactical Initiatives

Organizational Issues and Structure



Managing Trust Matters

Vendor Management and Third-Party Risk Profile

Chapter 2 Identifying Potential Trust Services Markets

Regional Market Potential

International Market Potential

Customer Base

The Competition

Dynamics of the Local Economy

External Environment: Implications for the Trust Department

Tips and Insights

A Case Study: Potential for Trust Markets in Arizona

Chapter 3 Administering Personal Trusts

The Essence of Trust Administration

Preparation for Administration

Administrative Policies Decision Making and Recordkeeping in the Trust Department

The Leadership and Coordination Role of the Trust Administrator

Distinctions Between Estate and Personal Trust Administration

Estate Administration

Trust Administration

Custody Administration

Businesses in Trust

Recognizing Liability Factors

Trust Administration Profitability Cost Accounting

Administrative Considerations

Decedent Estates


Agency Accounts

Chapter 3A: Personal Fiduciary Services

Fiduciary Accounts

Powers and Duties of a Trustee


Supervisions of Fiduciary Services

Laws and Regulations

Uniform Trust Laws

Appendix 3A.A: Fiduciary Activities of National Banks 12 CFR Part 9

Appendix 3A.B: Personal Fiduciary Services — Types of Personal Trusts

Appendix 3A.C: Comptroller’s Handbook Booklets

Chapter 4: Administering Employee Benefit Accounts

Defining the Target Market

Accepting and Establishing an Employee Benefit Account

Administrative Policy

Role of Account Administrator

Developing a Relationship with the Employee Benefit Client

Distinguishing Between Various Employee Benefit Plans

Administering Defined Benefit Plans

Administering Defined Contribution Plans

Administering IRAs, Prototype Plans, Welfare Benefit Plans, Nonqualified Plans, and Master Trusts

Inheritance Tax Waivers

Recognizing Fiduciary Responsibilities

Employee Benefit Administration Profitability

Administrative Safeguards

Small Business Jobs Protection Act of 1996

Specific Employee Benefit Account Administration Safeguards

Written Procedures

ERISA — Investment Issues

Appendix 4A: Sample Participant Loan Policies and Procedures

Appendix 4B: U.S. Department of Labor Field Assistance Bulletin 2002-3

Chapter 4A: Securities Lending

Anatomy of a Loan

The Lender

The Borrower

The Intermediary

Going It Alone

Risk Management

Laws and Regulations

Appendix 4A.A: Securities Lending Risk Control Checklist

Appendix 4A.B: Regulation T — Part 220 Section 220.10

Appendix 4A.C: Securities Exchange Act of 1934 Rule 15c3-3 Customer Protection —

Reserves and Custody of Securities

Appendix 4A.D: ERISA PTE 81-6 Involving Lending of Securities by Employee Benefit Plans

Chapter 4B: Custody Services

The Custody Services Industry

Board and Management Supervision

Global Sub-Custodian Network

Safekeeping and Settlement

Securities Servicing

Securities Lending

Other Value-Added Custody Services

Banks as Users of Custody Services

Document Custody Services

Risk Management

Laws and Regulations


Appendix 4B.A: Summary of Key Internal Controls

Appendix 4B.B: Custody Services Laws and Regulations

Appendix 4B.C: Rules and Regulations Investment Company Act of 1940 17 CFR 270.17f

Appendix 4B.D: Glossary

Chapter 5: Marketing Trust Products and Services



Marketing Trust Services

Bank Staff

Presentations to the Community

Will and Trust Files

Marketing Employee Benefit Services


Supervision and Management of Trust Activities

Chapter 6: Investment Management Services

Portfolio Management and Advisory Services

Regulation and Supervision

Investment Functions

The Portfolio Management Process

Selecting Outside Investment Managers

Investment Accounts

Other Assets

Measuring Investment Performance


Applicable Laws for Trust Investments


Appendix 6A: Investment Management Policy Guidelines

Appendix 6B: Use of Derivative Securities

Chapter 6A: Customer Financial Planning Assistance Through the Trust Department

The Trust Department’s Traditional Role in Financial Planning

The Financial Planning Industry

The Trust Department Expands Its Role in the Financial Planning Process

Launching the Bank’s Financial Planning Program

Chapter 6B: Bank Funds Management — Special Report

Which CMOs Can You Buy?

Why Some Investors May Find CMOs Distressing

Cautions in Using Mortgage-Backed Securities

Managing Your CMO Risk Hedging When It’s Already Too Late

Chapter 7: Trust Banking Consolidation System and Information Issues

Consolidation and Concentration

New Pace of Information in Trust Business

Revenue, Expense, and Risk Information

Focus on the Client

Multisystem Approach

Define Currently Used Systems

Modify, Replace, or Improve Decisions

Incremental Changes Add Value

Investment Products and Services

No Universal System

Trust Department Disaster Recovery Plan

Chapter 8: Examining Legal and Regulatory Issues

Legal Management

Regulatory Framework

Regulatory Issuances

Self-Deposit of Fiduciary Funds — OCC Bulletin 2010-37

Other Legal Issues

Changing Investment Standards by States

Assessing Management Fees in Collective Investment Funds

Transfer Tax Overview

Customer Identification Program

Identity Theft Prevention Program

Recordkeeping and Record Retention Guidelines and Procedures

Appendix 8A: Regulatory Issuances

Appendix 8B: Discussion of the Comptroller’s Handbook

Appendix 8C: Retail Investment Sales: Guidelines for Banks (Available Only on CD)

Appendix 8D: Fiduciary Standards by State Updated Rule of Prudent Investing

Chapter 9: Managing Risk in a Community Bank Trust Department


Internal Policies/Controls Addressing Operations — Essential to Risk Control

Pending Litigation — Future Risks Can Be Mitigated by Learning from Past Mistakes

Operations, Controls, and Audits

Staff, Facilities, and Operating Systems

Securities Lending Activities — Product Suitability


New Business Development


Adequacy of Administrative Policies and Procedures

Employee Benefit Account Administration

Overall Policies, Practices, and Procedures

Trend Toward Asset Management — Potential for Increased Risk

Risk Control — Investment Selection Process

Collective Investment Funds — Management Risks

Mutual Funds — Management and Investment Risks

Risks Associated with Retention of Life Policies in Trust Accounts

Importance of Internal Controls

Additional Regulatory Concerns

Exhibit 9.1: Risk Management Program

Chapter 10: Trust Department Performance

The Trust Industry

Trust Department Trends for Profitability

Salary and Benefit Expense

Compensation and Insurance

Chapter 11: Internal Control

Critical Components

Control Environment

Risk Assessment

Control Activities

Accounting, Information, and Communication Systems


Appendix A Glossary

Internal Control Questionnaires

[Chapters 1 through 10]