Personal Management Trust

August 18, 2016 BSP CIRCULAR NO. 920-16 SUBJECT : Personal Management Trust The Monetary Board, in its Resolution No. 1350 dated 28 July 2016 approved the amendments to Subsections X409.9/4409Q.9 of the Manual of Regulations for Banks (MORB) and the Manual of Regulations for Non-Bank Financial Institutions (MORNBFI), respectively, and the Financial Reporting Package for Trust Institutions to provide for the creation of the Personal Management Trust: SECTION 1. Existing provisions under Subsections X409.9/4409Q.9 of the MORB/MORNBFI are hereby deleted and shall now read as follows: "Subsection X409.9/4409Q.9. Personal Management Trust. The guidelines on Personal Management Trust accounts are as follows: a. Definition . Personal Management Trust (PMT) is a living trust 1 created by an agreement whereby the trustor conveys property or a sum of money to be managed by the trustee, as the agreement dictates, generally for the preservation of the assets or property for future use of the beneficiaries and/or to answer for their current needs. The trustor may or may not nominate third-party beneficiary/ies. The trust agreement must specify the name/s of the beneficiary/ies. Upon effectivity of this Circular, no new Living Trust Account shall be established; consequently and for purposes of reporting, all valid and existing Living Trust Account shall now be considered as Personal Management Trust. If the Living Trust Account (LTA) does not conform with LTA guidelines, it shall be considered as Other Fiduciary Account. b. Minimum criteria . 2 A PMT account shall meet the following criteria: 1. Minimum entry amount and maintaining balance shall be equivalent to at least P100,000; Provided, That PMT with balances of up to P500,000 shall only be invested in deposits and government securities; 2. The agreement shall clearly state the specific purpose(s) for which the account was established which shall be consistent with the general objectives of the PMT which is the preservation of the assets or property for the future use of the beneficiaries and/or to answer for their current needs; The distribution clause shall clearly and specifically define the manner and conditions under which the assets (including income thereof) will be distributed. Any distribution/withdrawal of assets (including income thereof) shall be consistent with the purpose of the PMT, strictly in accordance with the distribution clause, and made only to the designated beneficiary/ies. Consequently, the trustee is expected to obtain adequate documentation to ensure the propriety of distribution/withdrawal of assets (including income thereof). Pre-printed PMT agreements may be allowed for expediency. Provided, That the section for the trust purpose and the distribution clause shall not be pre-printed and shall be filled up only upon signing thereof by the trustor; 3. The length of PMT's existence should be consistent with the purpose of the trustor. Any termination for causes that are inconsistent with the purpose/distribution clause shall render the trustor ineligible from opening a new PMT within a period of one (1) year from termination date; and 4. Management of the trust assets shall be aligned with the investment objective/s and risk parameters set forth by the trustor. PMT accounts that do not meet any of the above criteria shall be considered as other fiduciary accounts subject to applicable reserves. c. Marketing . Officers and personnel of the Bank proper, including Branch Managers, shall not be allowed to market personal management trust products and sign pre-printed PMT agreements. However, Branch Managers/Officers may refer clients to the Trust Department and give a short introduction on the PMT product to prospective clients. d. Reserve Requirement. The PMT shall be subject to zero-percent reserve requirement. DETACa SECTION 2. The following are the amended sections of the Financial Reporting Package for Trust Institutions (FRPTI): a. Manual of Accounts "CONTRACTUAL RELATIONSHIPS OF TRUST INSTITUTIONS I. Trust . . . xxx xxx xxx (3) Individual Trust Accounts . . . (a) Personal Trust . . . (i) Personal Management Trust This refers to a living trust 1 created by an agreement whereby the trustor conveys property or a sum of money to be managed by the trustee, as the agreement dictates, generally for the preservation of the assets or property for future use of the beneficiaries and/or to answer for their current needs. The trustor may or may not nominate third-party beneficiary/ies. The trust agreement must specify the name/s of the beneficiary/ies. (ii) Testamentary Trust . . . xxx xxx xxx" a. n Reporting Template The following reporting templates of the FRPTI shall be revised to replace "Living Trust" with "Personal Management Trust" , particularly Item "(7)(a)" under "Additional Information" (line item no. B106) (Annex A) : 1) Schedule BS-Balance Sheet-Consolidated (Peso and FCDU) 2) Schedule A1-Balance Sheet-Peso Accounts 3) Schedule A2-Balance Sheet-FCDU/EFCDU Accounts Transitory provision . Pending the release of the revised reporting template described above, the existing reporting template for Living Trust Account may be used for PMT accounts. SECTION 3. This Circular shall take effect fifteen (15) days following its publication in the Official Gazette or in a newspaper of general circulation. FOR THE MONETARY BOARD: (SGD.) VICENTE S. AQUINO Officer-in-Charge ANNEX A Footnotes 1. Being a living trust, PMT becomes operational during the lifetime of the trustor as soon as the agreement is accomplished. 2. This applies to the newly created PMT account upon the effectivity of the Circular. 1. Being a living trust, PMT becomes operational during the lifetime of the trustor as soon as the agreement is accomplished. n Note from the Publisher: Copied verbatim from the official document. Letter "a" should read as "b".