Directions to Trust Directors of Directed Trusts By Michael A. Sneeringer and Jordan D. Veurink
Michael A. Sneeringer is a partner in the Naples, Florida, office of Porter Wright. He is Probate & Property’s articles editor for Trust and Estate and the group chair of the ABA RPTE Section’s Non-Tax Estate Planning Considerations Group. Jordan D. Veurink is a shareholder at Woods, Fuller, Shultz & Smith, P.C., in Sioux Falls, South Dakota. He is a co-vice chair of the ABA RPTE Section’s Asset Protection Planning Committee.
statutory guidance than others concerning the powers and duties of a trust protector of a directed trust. For corporate fiduciaries declining trusteeship of a trust because of assets it does not want to manage, such as real estate, a closely held business, or a large stock concentration, a directed trust joins the trust creator-client, desiring a corporate fiduciary, with a corporate fiduciary, desiring trusteeship and continuing client contact. Florida had a limited version of a statute on its books related to “directed trusts,” but up until 2021 the statute offered minimal guidance to attorneys and clients alike. Further, few Florida cases offered clarity on directed trusts. Some Florida clients designated trust protectors in their trusts but could never articulate their powers. Further, often the designated trust protector was the client’s attorney. How many of those attorneys are still practicing in 2022? Following
the passage of new legislation in 2021, the administration of a Florida trust can more readily be directed by nontrustees. Other states, including South Dakota, have a more robust statutory framework related to directed trusts. South Dakota enacted its directed trust statutes in 1997, which have since been modified numerous times at the recommendation of its governor’s Task Force on Trust Administration Review and Reform. South Dakota’s statutes provide considerable flexibility in drafting directed trusts or, in the absence of articulated powers for trust advisors and trust protectors, provide default provisions and numerous powers that may be incorporated by reference. Directed Trusts Overview A client may want a specific person or institution to have complete discretion to invest trust assets, but that person or
Published in Probate & Property, Volume 36, No 3 © 2022 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.
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May/June 2022
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f you are reading this article, you have probably read the words “directed trusts” before. Directed trusts have gained in popularity over the past decade. For years, many states have allowed a person or entity, other than the trustee, a power over some aspect of a trust’s administration. Such person or entity has been termed a “trust protector,” “trust advisor,” or “trust director.” So-called directed trusts sprang up almost overnight. Some states had more
