Posts Tagged ‘Governance’
Seven Risk Mitigation Strategies for the Successor Trustee or War Stories from a Trust Governance Expert Witness
Since 2013 I have been engaged to testify as an expert witness in the California Courts to opine upon the Trustee’s Standard of Care. Through these engagements I have compiled a list of the “governance practices” that a successor trustee is encouraged to adopt. Following is a summary of these practices as well as a…
Read MoreInvestment Governance Best Practices for Business Managers (How to Watch the Hen House)
The Problem: You are a business manager(1), and it is either explicitly or implicitly the case that you are responsible for monitoring the activities of the investment managers that have been entrusted with your clients’ capital. (If you are not a business manager or disagree with this statement, stop reading. This paper does not apply…
Read MoreDuty to Prudently Administer or “Check, check, double check, recheck” (1 of 12)
Duty of Prudence: Section 2(a) of the Uniform Prudent Investor Act directs, “A trustee shall administer the trust as a prudent person would…” But how is one to know how a prudent trustee would act?
Read MoreThe Trustee’s Compliance Library
Trustees and beneficiaries don’t always see eye-to-eye on issues of trust administration and governance. For the most part, the reasons for these disagreements are divergent beliefs about responsibility, duty, fairness, and transparency. Then the attorneys are called and nobody wins. At the heart of all of these conflicts is a single issue–did the trustee act…
Read MoreCase Study – Modifying Trust Distribution Rates
Last month the Anodos team worked on an interesting investment governance project that we thought you might find elucidating. Facts: A grantor setup a “Net Income” trust in 1987 for the benefit of their grandchild. The historic distribution rate from this trust, after all administrative expenses, has been 3.2%. (We know this by reviewing the last…
Read MoreA trustee’s duty to investigate conflicts of interest
Duty to Investigate: Section 2(d) of the UPIA directs, “A trustee shall make a reasonable effort to verify facts relevant to the investment and management of trust assets.” In response to this duty, a prudent trustee will investigate whether any conflicts of interest exist between the trust, the investment advisor, and the investment products or process the advisor has adopted.
Read MoreA Transitive Property of Fiduciary Duties?
If A = B and B = C, then A = C. This is the “transitive property of equality” that we learned in our remedial algebra classes so long ago. Is there a transitive property of fiduciary duties? We know that the trustee owes duties of care to the trust beneficiaries. We also know that…
Read MoreAn ERISA Trustee’s Duty of Loyalty
It’s hard to be an ERISA trustee. Many plan trustees have other pressing corporate responsibilities and few have the time or experience to become fiduciary governance experts. But fiduciary governance need not be a complicated subject. Good fiduciary governance, whether done for a massive $10 billion pension plan or a small 401k with a couple…
Read MoreJohnny Depp v. TMG: What are a business manager’s duties of care?
The Question: What standard of care and what attendant duties does a business manager owe to their client? The Answer: It depends on what roles and services the business manager fulfills for their client. A good argument can be made that the business manager owes a similar fiduciary standard of care to their clients as…
Read MoreTrustee’s duty to develop an administrative plan or “If you don’t know where you are going you might end up somewhere else.”
Duty to Develop a Plan: Section 2(a) of the UPIA directs, “A trustee shall invest and manage trust assets as a prudent investor would, by considering the purposes, terms, distribution requirements, and other circumstances of the trust.” In response to this duty, a prudent trustee will develop an administrative plan that projects the income and…
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