What is a Directed Trust?
There are many different types of trusts that a person or entity can establish in Connecticut, and they have distinct aims and purposes. With the passage of new trust laws in Connecticut back in 2020, through which Connecticut adopted its own version of the Uniform Trust Code, more trust options became available in the state. One of those trust options is the directed trust. What is a directed trust, how does it work, and who should consider establishing one? Our Connecticut trusts attorneys can explain directed trusts in more detail and can speak with you today about your trust needs.
Directed Trusts in Connecticut
A directed trust is a specialized type of trust in which the duties of the trustee are divided between or among multiple trustees — individuals or entities. Yet this type of trust is not just one in which there are co-trustees that are together managing all aspects of the trust. Instead, with a directed trust, the specific duties of a trustee can be divided between two or more trustees that will have different responsibilities. How does this work in practice?
A trustee is responsible for various aspects of trust administration: administration of the assets (such as filing tax returns for the trust), investment of the assets, management of the assets, and distribution of the assets to the beneficiaries. With a directed trust, separate trustees can be appointed for each of those administration responsibilities, and in the role of “director” rather than as “trustee.” Directors still have the fiduciary responsibilities of trustees, but their title is different.
Accordingly, with a directed trust, the trust can have an “investment director” and a “distribution director,” for example, rather than a trustee or co-trustees. Individuals or entities can be named as directors, depending on the wishes of the settlor (the party creating the trust) and the needs of the trust. For example, a bank might be named as the trust director, whereas a family member or other individual might be appointed as the distribution director. Individuals can also be named for all director roles, or entities can be named for all director roles.
Who Needs a Directed Trust?
Directed trusts are beneficial when a trust is going to hold specialized assets, and particularly those that will be generating income and will require ongoing careful investment and distribution management.
For example, if a trust is going to hold the assets of a closely held business, or certain securities, or high-value art or other collectibles, there may be a need to have separate trust directors to manage the complex details of those specialized assets.
Contact a Connecticut Trusts Attorney in Canton for Assistance Today with Your Directed Trust
Do you have questions about establishing a directed trust or any other type of revocable or irrevocable trust in Connecticut? At the Law Office of Brian S. Karpe, we regularly assist clients with the creation of various types of trusts and all other components of estate planning. We can answer your questions today and can begin working with you to establish a directed trust and any other types of trusts that meet your needs. Do not hesitate to reach out to an experienced Canton trusts lawyer at the Law Office of Brian S. Karpe for help. Contact our firm today to learn more about our services.
Source:
cga.ct.gov/2023/pub/title_45a.htm
