Text or Call Today 571-403-2619

Blog

What Is a Directed Trust and What Are Its Benefits?

Posted by Aubrey Carew Sizer | Jun 22, 2021

Directed trusts can be a useful estate planning tool, allowing you to place your family's assets in a trust but benefit from the expertise of an advisor who knows more about the handling of certain trust functions than you may. 

The benefit of a directed trust is it allows you to retain control while appointing someone to handle any special assets or conditions that the trust might oversee.  In the case of a regular trust, the trustee is in charge of all aspects of the trust. With a directed trust, you can appoint someone other than the trustee to be in charge of elements like distributions or investments. This splits up the responsibilities: the trustee can focus on handling the administrative aspects of the trust while the appointed advisor directs the trustee on one part of the trust.

For example, an investment advisor could focus on the trust's investments. If you have complicated investments, it might be a good role for a trusted financial advisor. In the case of a family business, you may want family members to have a say or want an objective non-family member to assess the family's needs. A distribution advisor would be responsible for making distributions to the beneficiaries. This might be especially useful if you want a family member to be able to make decisions about a child with special needs. Or you might even want a committee of family members to decide how to make distributions in order to make distributions based on the needs of the beneficiaries. 

Both the trustee and the advisor are considered fiduciaries, which means they must act in the beneficiary's best interest. While the trust document sets out the responsibilities of each party, if you are creating a directed trust, it is also a good idea to write a statement of intent that explains what you want the roles of the trustee and the advisor to be. 

Directed trusts are very complicated and require careful planning. If you are thinking about a directed trust, consult your attorney. 

About the Author

Aubrey Carew Sizer

Aubrey Carew Sizer is the Principal Attorney of The Law Office of Aubrey Carew Sizer PLLC, a Northern Virginia law firm providing representation for Wills, Trusts, and Estate Planning, Long-Term Care Planning, Guardianship and Conservatorship, Special Needs Planning for the Disabled, and Probate, Estate and Trust Administration.

Services

The Law Office of Aubrey Carew Sizer PLLC provides customized and affordable estate planning (including wills, living trusts, powers of attorney, and advance medical directives); elder law services (including long-term care planning, special needs planning for the disabled, and guardianships and conservatorships); probate, estate and trust administration (including advising executors and administrators of estates about post-mortem planning and the local probate process in Virginia), as well as general aging and disability advice in Northern Virginia, including but not limited to Arlington, Alexandria, Ashburn, Bristow, Burke, Centreville, Chantilly, Gainesville, Fairfax, Falls Church, Haymarket, Herndon, Leesburg, Manassas, Manassas Park, Reston, Springfield, Sterling, and throughout Loudoun, Prince William, and Fairfax counties.

Menu