Directed Trusteeship; How to Keep Your Trusted Wealth Advisor.
Posted on Fri Sep 9, 2016, on Directed Trust
From Our “Ask a Question” Mailbag: A Directed Trust maybe the answer to your problem!
Most Recently Updated August 9, 2018.
“I am considering setting up an Irrevocable Trust to hold assets for my children. But, I want my current wealth manager investing the trust property. Unfortunately, if I pick a corporate trustee, they will use their money manager. How do I force the corporate trustee to use my financial advisor?”
Form a Directed Trust.
Setting up an Irrevocable Trust for your family is an excellent way to provide asset protection and do tax planning. Because typically the trustee controls fund management, some people decided against forming these trusts. Professional trustees often select their favorite money managers. This excluded grantor’s trusted financial advisors. These concerns resulted in the invention of the Directed Trust.
The Directed Trustee Takes on Administrative Duties.
When a trust is created with a Directed Trustee, the trust terms divide responsibilities between the corporate trustee and an investment manager. Usually, the trust terms give the bank or trust company administrative functions. These duties include tax preparation, paying bills and determining distributions. The trust terms exclude the trustee from investing trust funds. Instead, the trustee is obligated to take “direction” for investment from someone else. Another party is assigned the right to invest assets. In the alternative, the terms grant a neutral person (friendly to the Grantor) the power to select the investment manager. This person “directs” the Trustee’s investment. In other words, the advisor “directs” the “directed trustee.” The Trustee is excused from all responsibility and must follow instructions. In this way, this neutral person may appoint the trusted wealth advisor.
Your Favorite Investment Advisor “Directs” Trust Investments.
While the neutral person may select the trusted wealth advisor, he can also remove and replace the advisor. This way you can have all the asset protection and tax advantages of an Irrevocable Trust while maintaining your long standing relationships. But, if your personal money manager should fall out of favor, removal is easy.
There are several ways to set up a Directed Trust. Therefore, I suggest we set up a free consultation so we can see which option best fits your situation.
More Planning Questions?
The Directed Trust is only a piece of the Estate Planning process. By all means, if you want to learn more, please read my more detailed article, Estate Planning Everything You Need to Know.
In Conclusion: Directed Trust
I hope that this article was helpful in explaining the Directed Trust. Further, I included links to even more detailed information on my website so you can learn more. Therefore, please contact me and let me know how I did. Certainly, your comments and questions are welcome!
Let our Estate Planning lawyers help walk you through what can be a confusing process. To begin with, call to speak to one of our experienced estate planning lawyers. By all means, our lawyers are ready to answer your questions. In fact, feel free to contact our office for a free consultation. Ultimately our goal is to make the process as painless as possible!
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