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Regulator Panel

Regulator Panel

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Regulator Panel

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  1. Regulator Panel Diana Brannon Trust Examination Specialist Federal Deposit Insurance Corporation San Francisco, CA

  2. 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?

  3. Regulator Panel - FDIC 1 - Duty of Skill and Care Documentation, documentation, documentation Policies, policies, policies

  4. Regulator Panel - FDIC 2 – Duty of Loyalty • Conflicts of interest with affiliates • Own-bank stock and products • Receipt of undisclosed fees

  5. Regulator Panel - FDIC 3 – Duty Not to Inappropriately Delegate • Uniform Prudent Investor Act – appropriate delegation • Deferral to co-trustees

  6. Regulator Panel - FDIC 4 – Duty to Keep and Render Accounts • Operations 5 – Duty to Furnish Information • Beneficiary access

  7. Regulator Panel - FDIC 6 – Duty to Keep Trust Property Separate • Crumbling “Chinese Wall”? 7 – Duty to Keep and Control Trust Assets • Controls over personal property

  8. Regulator Panel - FDIC 8 – Duty to Make Trust Assets Productive • Initial investment review • Annual review process 9 – Duty to Pay Income to Beneficiary

  9. Regulator Panel - FDIC 10 – Duty to Deal Impartially with Beneficiaries • Poor documentation • Appearance of favoring current beneficiary over remainder beneficiaries

  10. Regulator Panel - FDIC 11 – Duty with Respect to Person Holding Power to Control • Receiving directions 12 – Duty with Respect to Co-Trustees • No action is an action

  11. Regulator Panel - FDIC 13 – Duty to Defend Actions • Defense costs 14 – Duty to Use Reasonable Care in Performing All Actions • Risk management starts at the door

  12. Regulator Panel 15 – Duty to Review and Enforce Claims • Shareholder class action lawsuits Additional fees for collection should not be charged to fiduciary accounts 16 – Duty to Preserve Trust Property • Vault controls

  13. Regulator Panel Self-Directed IRAs Not “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.

  14. Regulator Panel 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

  15. Regulator Panel Other IRA Issues • Real Estate • LPs/LLCs • Note Receivables • UBTI

  16. Regulator Panel Regulation R • Applies to all banks • Bank wide assessment • Custody accounts excluded from relationship compensation test

  17. Regulator Panel QUESTIONS? COMMENTS?