While trusts are a common form of estate planning, there are variations in how trusts are formed. For example, Alex T. was considering forming a trust then transferring his family business to the trust. However, he was concerned about appointing a trustee. Alex had built his company from the ground up and was reluctant to hand authority and control to someone who did not possess his personal interest in the company. Eventually, he discussed the pros and cons of trusts in general – and directed trusts specifically – with his estate planning attorney.
Trusts generally consist of the following components:
Directed trusts divert from the general anatomy of a trust in one important area: the trustee.
In common trusts, the trustee manages the trust assets, having full authority over management and investment decisions. A trustee might be held responsible for making bad investments even if the trustee lacks investment or financial experience. However, the document forming the trust may restrict the trustee from delegating another person or entity to handle investments and business interests.
In a directed trust, the trustee’s responsibilities are split. One trustee serves as the directed trustee, literally taking directions from another trustee. The directed trustee also may be instructed to perform administrative duties for the trust.
Do you want to maintain control over your investment assets? Are you looking for a trust that allows you to delegate some duties to a trustee with special experience or skills? A directed trust may be right for you.
John Mangan is an experienced Florida estate planning attorney, who has been board certified in Wills, Trusts & Estates by the Florida Bar. Call Law Offices of John Mangan, P.A. at 772-324-9050 to set up an appointment or use our online Contact Form.