Define: Directed Trust

A directed trust is a type of trust in which the trustee’s duties and powers are limited or directed by a trust advisor or trust protector.

In a traditional trust, the trustee has full discretion and control over the trust assets and administration. In a directed trust, the trustee’s powers are limited or directed by a third party.

The trust advisor or trust protector can be a designated individual, a committee, or a professional advisor such as an attorney or financial advisor.

A directed trust allows for greater flexibility and customization in trust administration, as well as the ability to involve specialized professionals in the decision-making process.

One potential drawback is the potential for conflicts between the trustee and the trust advisor or trust protector, as well as the potential for increased complexity in trust administration.

Directed trusts are typically used for complex or high-value trusts, but they can be established for any type of trust.

The trust advisor or trust protector is typically designated in the trust document, and their powers and duties are outlined in detail.

The process for removing or replacing the trust advisor or trust protector is typically outlined in the trust document, and may require court approval in some cases.

The legal requirements for establishing a directed trust vary by jurisdiction, but generally involve creating a trust document that clearly outlines the roles and responsibilities of the trustee, trust advisor, and trust protector.

It is important to consult with a qualified estate planning attorney or financial advisor to determine if a directed trust is the right option for your specific circumstances and goals.