An investment policy statement (IPS) is a document that outlines the investment goals, objectives, and constraints of a trust. It serves as a roadmap for the trustee when making investment decisions and helps ensure that the trust’s assets are managed in accordance with the grantor’s intentions. An investment policy statement template for trusts can be a valuable tool for trustees, as it provides a framework to follow when developing an IPS.
An investment policy statement template for trusts typically includes the following information:
Investment goals and objectives: This section should clearly state the investment goals of the trust, such as growth, income, or preservation of capital. The objectives should be specific, measurable, achievable, relevant, and time-bound.
Investment constraints: This section should identify any constraints on the trustee’s investment discretion, such as restrictions on asset classes, geographic regions, or investment styles. It may also include specific investment prohibitions.
Investment policy: This section should outline the investment strategy that the trustee will follow to achieve the trust’s goals and objectives. It should include the asset allocation, diversification strategy, and risk tolerance of the trust.
Review and monitoring process: This section should describe how the investment policy will be reviewed and monitored. It should specify how often the IPS will be reviewed, who will be responsible for the review, and what factors will be considered.
Elements of an Effective Investment Policy Statement
An effective investment policy statement for trusts should be:
Clear and concise: The IPS should be easy to understand and follow. It should avoid jargon and technical terms that may be unfamiliar to the trustee or beneficiaries.
Tailored to the specific trust: The IPS should be tailored to the specific needs of the trust. It should take into account the trust’s goals, objectives, constraints, and risk tolerance.
Reviewed and updated regularly: The IPS should be reviewed and updated regularly to ensure that it remains current and relevant. It should be reviewed at least annually, or more frequently if there are significant changes in the trust’s circumstances.
Benefits of Using an Investment Policy Statement Template
There are several benefits to using an investment policy statement template for trusts. These benefits include:
Saves time and effort: An IPS template can save the trustee time and effort by providing a framework to follow when developing an IPS. This can be especially helpful for trustees who are new to investing or who have limited experience with trusts.
Ensures consistency: An IPS template helps to ensure that the investment policy is consistent with the trust’s goals and objectives. This can help to avoid costly investment mistakes and protect the trust’s assets.
Provides accountability: An IPS template provides a record of the trustee’s investment decisions. This can help to ensure that the trustee is acting in accordance with the trust’s governing documents and the wishes of the grantor.
Conclusion
An investment policy statement template for trusts can be a valuable tool for trustees. It can help to ensure that the trust’s assets are managed in accordance with the grantor’s intentions and that the trustee is acting in the best interests of the trust’s beneficiaries. An IPS template can save time and effort, ensure consistency, and provide accountability.
It is important to note that an investment policy statement template is not a substitute for professional advice. Trustees should always consult with a qualified investment advisor to ensure that the IPS is appropriate for the specific trust. An investment advisor can also help to implement the IPS and monitor the trust’s investments to ensure that they are performing as expected.
