A fundamental obligation of trustees is to ensure regular and frequent communication with trust beneficiaries, including quarterly reviews that address the following areas or topics:

Overview or Summary of Trust Operations

This summary will include income earned, distributions and investment performance. Depending on your custodial platforms, the generation of these reports should be mostly routine with some manual work needed to polish and collate information.

Investment Review

In addition to the performance reporting of trust assets, the trustee or Private Trust Company (PTC) will need to provide a broad market overview as well as a discussion of the tactical and strategic asset allocation of the trust, review of the investment policy guidelines and distribution provisions, with a summary of what this means to the beneficiary and the trust long term.

Outside managers may join for all or part of this review, depending on logistics (in the case of multiple managers, it is best to have one member of the administrative team handle this, perhaps in conjunction with the Investment Committee). The investment review should also be consistent with the Investment Committee and PTC’s investment approach and philosophy around trust management.

Principal and Income Review

There should be a review at each quarterly meeting, with an in-depth review annually, of the principal and income accounts of the trust, including what this means for beneficiary cash flows and taxes.

Outstanding Issues or Questions

This may reflect longer-term trust projects or objectives plus status updates on each area. For example, a decision to continue distributions to allow a beneficiary to raise income in their personal account to provide for a spouse might have a target goal of wealth to be moved over and progress reports on this objective.

Next Steps and Outlook

Each review will conclude with a summary of changes to objectives and the outlook for future trust investments or distributions.

Manage Taxation of Trusts

The trustee (or PTC) needs to review, at least annually, the state and federal tax returns of the trust in conjunction with the distributions and investment objectives of the trust. PTCs often provide tailored support to family members in the management of tax liability and ensuring a tax-aware approach is applied to all trust management and investments.

At Cerity Partners, our dedicated Family Office team has helped many families with their trustee and fiduciary needs. For more information on our fiduciary and trustee services, please contact a Cerity Partners advisor.

Read Part One of the Trustee Series

Read Part Three

Read Part Four

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