Chapter 3 of 8
Carving Up Authority: Who Does What in a Nevada Directed QSBS Trust
Chapter Summary
Breaks down the fiduciary roles in a Nevada Directed QSBS Trust and shows how their clear separation preserves non-grantor status while empowering founder-led investing.
Course Progress
A Non-Grantor, Directed trust succeeds only if the IRS and future beneficiaries see clear lines of authority. Nevada law provides a menu of fiduciary roles that isolate investment authority from distribution decisions and routine administration. The table below distills those roles; the brief notes that follow explain how they interlock to preserve the trust’s non-grantor status while letting founders steer the portfolio.
| Role | Core Mandate | Statutory Anchor | Practical QSBS Impact |
|---|---|---|---|
| Grantor (Settlor) | Funds the trust; sets initial terms; then steps back from distributions | N/A | Early gifting locks in low valuations and starts the five-year §1202 clock |
| Directed Trustee | Holds legal title; executes directions from advisers; maintains records | NRS 163.5548 | Reduced liability encourages professional trustees; trustee’s Nevada situs shields gains from state tax |
| Investment Trust Adviser (ITA) | Exercises investment authority: allocations, proxy votes, M&A, §1045 rollovers | NRS 163.5549 | Founder can keep a hands-on role without jeopardising non-grantor status |
| Distribution Adviser | Approves or denies beneficiary distributions (HEMS, education, start-up capital) | NRS 163.5551 | Separating this power from the ITA blocks arguments that the founder still “controls” trust assets |
| Trust Protector | Amends technical provisions, changes situs, replaces fiduciaries | NRS 163.5553 | Keeps the structure adaptive to tax-law shifts (e.g., post-OBBBA tweaks) |
How the Pieces Fit Together
- Segregated Duties = Separate Taxpayer: Because investment, distribution, and administrative powers reside in different hands, the trust files its own return and qualifies for its own §1202 exclusion cap.
- Founder-Led Investing Without Estate Inclusion: Serving as ITA gives the founder strategic investment authority, not ownership. That distinction preserves creditor protection and estate-tax efficiency.
- Nevada Trustee as Firewall: A Nevada-situs corporate trustee records every directive, providing an audit trail that satisfies both Nevada’s prudent-investor rules and IRS scrutiny.
- Protector Keeps It Future-Proof: Should another state overtake Nevada on dynasty-trust perks or if Congress rewrites QSBS again, the Protector can migrate situs or tweak language without court involvement.
With roles and responsibilities crisply defined, the trust gains the operational agility of a family office while retaining the tax posture of an independent taxpayer. In Chapter 4, we map these fiduciary mechanics onto the updated QSBS rules so you can see exactly where the tax savings materialize.