Benefits of Advisor-Directed Trust

This type of trust is designed to protect your assets from the risks of complacent management. An advisor Friendly Trust offers multiple checks and balances, which is important for protecting your assets. Additionally, it gives you flexibility when managing the assets in the trust. It is also a good option for a client with large assets.

Flexibility Control

Comparatively speaking, splitting the trustee responsibilities allows for more flexibility, control, and focused expertise. You’ve probably heard the saying “divide and conquer,” and building a directed trust gives you the ability to do just that. You can place your most dependable family members or advisors where you believe their skills will be most effective. Those advisers and family members can act as trust protectors, distribution advisors, or investment advisors. Frequently, a trust corporation like First Dakota serves as the administrative trustee. The trust’s assets must be distributed effectively to beneficiaries, and this is the responsibility of the distribution advisor. The investments will be under the investment advisor’s watch. Even better, you can use a number of advisors, each in charge of a different set of investments or asset classes.

Multiple Fiduciaries

An advisor-directed trust model can accommodate multiple fiduciaries and non-fiduciary appointments. Trustees must fulfill their fiduciary duties outlined in the trust agreement, such as paying the principal periodically. Trustees must also meet all other trust instructions, such as considering the beneficiary’s future needs.

The trust should also control the client’s assets and plans. If a client is happy with their advisor, the advisor will also be happy. Often, clients don’t want to separate their investment advisor from their adviser. Therefore, they must choose between hiring a directed trustee and keeping their advisor.

The benefit of an advisor-directed trust is that the grantor names more than one advisor. This way, the advisors can make important decisions for the grantor’s benefit. However, there are some risks associated with this kind of arrangement. State tax laws can restrict the number of advisors, so carefully consider the implications of any co-advisor arrangement.

Flexibility in the Management of Trust Assets

Adding powers of appointment to trust documents can give you flexibility in managing trust assets. This can be an especially helpful feature when you want to make changes to the trust after your death. Adding this flexibility allows you to make changes as circumstances change. For example, if you divorce your spouse, the power of the appointment holder could withhold principal distributions.

Another common strategy to build flexibility into trusts is naming a trust protector. A trust protector is an individual with power over the trust who is not a trustee. Often, a trust protector is named as the person to oversee the trust, especially for long-term trusts, which are more likely to face changes in circumstances.

Trust flexibility is important when your beneficiaries have to change needs and circumstances. This flexibility can prevent a beneficiary from misusing their assets or putting their legacy in the wrong hands. However, it’s important to remember that flexible trust is only for some.