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planning matters


an alternative to traditional trusts


Historically, when an individual created a trust, he or she named a trustee. Such trustee would have full responsibility for all administrative aspects of the trust including investment, distribution, accounting, and management. In recent years, directed trusts have become popular vehicles. A directed trust is a trust the removes one or more of the traditional powers of the trustee and vests such power or powers in a special trustee or committee designated to handle investments, distributions, or various aspects of trust administration. The term “directed trustee” results from the fact that in such an arrangement, the trustee takes its directions regarding the removed power from the special trustee or other trustee advisor in whom such power is vested. The popularity of directed trusts has risen for a variety of reasons. One such reason is the desire of families owning a business desiring the ability to maintain the business

as part of the trust over the long-term. Also, with directed trusts, a family can achieve more control over selection of the team that manages the trust over the long-term. Directed trusts come in a significant number of mary e. vandenack variations. A fully directed trust would be one where all the traditional powers of the trustee are removed and vested in another advisor. The structure of a fully directed trust might include an investment direction advisor, a special holdings advisor, a distributions advisor, and a trust protector. Any of the positions could be a committee rather than a single advisor. An investment direction advisor would typically have the authority to direct the trustee as to the investment of the trust assets. An investment direction advisor is desirable where the family prefers to continue to hold a concentrated position of a particular asset or where the family has a long and positive relationship with a particular investment advisor and wants such advisor to continue to invest for the family. A special holdings advisor might be utilized if there is a desire to bifurcate the direction of investments with respect to only certain holdings of the trust. For example, the family might have the trustee invest publicly traded securities but name a special holdings advisor with respect to a family owned business. A family may want o use a distribution advisor so that distribution decisions are made by someone who is familiar with family situations. The use of a distribution advisor might be particularly important if there is a special needs child or a child who has struggled with particular challenges such as mental health or addiction. A trust protector or committee can be empowered with the ability to change trust advisors (with specified directions regarding the same), to amend the trust for administrative provisions and take actions that keep the trust functioning in the manner intended by the settlor even when laws and circumstances change. Some states have very favorable laws regarding directed trusts. Others have less favorable laws and some states have no directed trust statute at all. Regardless of where you live, it is possible to have a directed trust if it makes sense for you.

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metroQUARTERLY’S Spring (FEB/MAR/APR) 2016 Issue  

metroQUARTERLY’S Spring 2016 Issue is online now! metroMAGAZINE/mQUARTERLY is published quarterly by ALH Publications, serving the Omaha/Lin...

metroQUARTERLY’S Spring (FEB/MAR/APR) 2016 Issue  

metroQUARTERLY’S Spring 2016 Issue is online now! metroMAGAZINE/mQUARTERLY is published quarterly by ALH Publications, serving the Omaha/Lin...