HomeGeneralWhat are the different Directed Trust roles?

What are the different Directed Trust roles?

A standard Directed Trust has the following roles: 

Grantor: In a directed trust, the grantor is the person who creates the trust and contributes assets to it. They establish the trust and dictate its terms, including who will direct the trustee regarding investment decisions or distributions.

Trustee: The trustee of a Directed Trust is typically a  Trust Company, but can sometimes also be an individual. By having a trust company (or individual) located in the state you want to create the Trust, the situs of the trust becomes established, allowing the Grantor to take advantage of that state’s favorable trust laws. Ownership of the assets within the trust is transferred to the Trustee. In a Directed Trust, the Trustee is typically only responsible for administration of the trust, meaning they hold the property and make distributions at the guidance of other advisors. These trustees are also responsible for the maintenance of bank accounts, filing tax forms, creating trust statements, and receiving property on behalf of the trust. 

Investment Trust Advisor: The Investment Trust Advisor or Advisors if multiple people are serving in that capacity, are responsible for directing the Trustee in regards to any investment of trust property. Some common examples of trust investments that the Investment Trust Advisor would direct include investments in stock, LLCs or any other business entity, real estate, private equity, and even art. The trustee is bound to follow the directions of the Investment Trust Advisor in any such investment as directed by the Trust Agreement.

Trust Protector: The trust Protector oversees the trust. Typical powers granted to a Trust Protector include removing trustees or advisors under the trust, changing the governing laws or situs of the trust, amending the trust’s administrative provisions, modifying the trust for tax compliance, as well as various other powers that may be granted in the governing trust document.

Distribution Committee: The distribution committee is a committee typically made up of Primary Beneficiaries whose interests are considered adverse to the grantor’s interest. The committee can direct or approve distributions from the trust to the Grantor or other beneficiaries under the trust. Typically, upon the death of the Grantor, the distribution committee ceases to exist, and the trustee becomes responsible for distributions unless another distribution advisor is appointed under the governing trust agreement.

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What is a Trust?

A Living Trust is a financial tool that lets you plan, organize, and protect your life. It’s a personal entity that allows you to add assets and plan out your inheritance. Eliminating legal battles, cost, and time spent by your loved ones. 

Think of it like a personal LLC that you put everything you own in. Except it doesn’t protect you from liability like an LLC does, it protects you from probate and conservatorship. 

Probate is the complicated court process (12-18 months) where a judge decides what happens to your assets after you die, become incapacitated, or are “deemed” incapable. Creating a living trust allows your assets to completely circumvent probate and immediately transfer to your loved ones. 

In addition to being able to name heirs (your beneficiaries), a Trust also allows you to assign someone to manage it (your successor trustee). Instead of going through probate, your Successor Trustee takes control of the Trust, handles your affairs, and distributes your assets according to your instructions. The person you select as Successor Trustee should be your most trusted person. Like a best friend or closest family member.

At Dynasty, we believe everyone should have a Living Trust. If you have children, assets, or plan to acquire assets in the future, you should create a Trust. That way when you buy your next home, open a bank or brokerage account, get startup shares, etc. – you can immediately title them in your trust.