Since we've been having such a rip-roaring good time discussing custody issues, let's keep bringing up points made in NASAA's page-turner of a model rule. Often the trustee of a trust is an investment adviser and not just the trust department of a bank & trust company. Investment advisers like to get paid, and it's convenient to be paid directly by the custodian of the securities account. If the adviser can appropriate/receive his fees from the custodian, the adviser does have custody. But, the adviser can avoid the higher financial requirements and the CPA surprise audit if they follow certain safeguards. To avoid those requirements, the adviser must indicate on Form ADV that it does or may have custody. The adviser needs the written authorization of the grantor (if he's still alive) or the attorneys for the trust (if it's a testamentary trust, established upon death of the grantor), the co-trustee (other than the adviser or its employees or owners), or a beneficiary of the trust. The adviser needs to send a billing statement showing the asset values and the method used to compute the fee. And, the custodian has to agree to send at least quarterly to the attorneys/grantor/co-trustee/benefiary a statement of all disbursements from the account of the trust, including the amount of investment management fees paid to the investment adviser and the amount of trustees' fees paid to the trustee.
If all of these safeguards are taken, the adviser acting as trustee can receive advisory fees directly from the qualified custodian. The adviser would have custody but would have the minimum financial net worth/bonding requirement waived.