What’s trust fund management?

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Trust fund management is the process of oversight and administration of some type of trust fund. This level of supervision can be extremely detailed or involve the execution of some tasks, depending on the structure of the trust fund. In all situations, the trust fund manager is expected to comply with the provisions of the trust and base all decisions relating to the management of assets and the disbursement of trust funds in accordance with those provisions.

While the exact scope of responsibility associated with a specific trust fund administration situation will vary, there are some core processes likely to be encountered with the administration of any type of trust. One of these core duties or processes is the evaluation of the assets that are connected to the fund. Depending on how the fund is structured, the manager may have authority to buy and sell assets as a means of maximizing the flow of return to the fund. For example, the manager of a children’s trust fund or a scholarship trust fund may sell shares when there is reason to believe that the value of those shares will fall and remain depressed for a period of time. The trustee then uses the proceeds from the sale of those shares to purchase another stock option that promises to generate a higher rate of return, increasing the value of the trust-related assets.

The trust fund management process also often involves overseeing and executing disbursements from the fund to beneficiaries. Those disbursements must follow the guidelines established as part of the fund setup. This means that before disbursements can be made from a scholarship trust fund, the recipient must meet all requirements found in the trust provisions. Likewise, the trustee of a family trust must follow the trust’s guidelines when extending a loan or processing a grant to a person who is considered a party to the trust agreement.

Another important component of trust fund management in any situation has to do with full and complete disclosure of the fund’s accounting records, when and as necessary. Fund beneficiaries can obtain information on the current financial status of the fund by contacting the administrator. In some cases, the manager must prepare and submit reports to beneficiaries at specified intervals. The fund manager should also be well versed in the laws and regulations governing the function of trust funds within the jurisdiction, reporting the activities of the fund to the appropriate tax and regulatory bodies.

For all these reasons, the selection of an individual to provide trust fund management must be considered very carefully. Ideally, the individual will have an educational background and some life experience that is useful in carrying out her assigned tasks. Often the management process is carried out by one to three co-managers, a system that helps create a series of checks and balances that ensure compliance with current laws and funding regulations, as well as providing the opportunity for distribute management responsibilities in a way that allows for greater efficiency and timely response.

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