What is a Directed Trustee?
Estate planning is a complex process with many steps. A directed trustee can simplify this for you. In a Directed Trust, specific tasks related to distributing and administering trust property are assigned to a specially appointed advisor, the Directed Trustee.
This advisor could be a wealth management firm or an individual with expertise in financial, legal, and fiduciary duties. They provide expert guidance to help you place your family’s estate in a trust and manage it effectively.
In this post, we’ll dive into what a directed trustee does and how they can assist with estate planning.
What does a Directed Trustee do?
A directed trustee is a type of trustee appointed to manage a trust according to the instructions of the grantor, the trust’s owner.
When a Directed Trustee is assigned to a Trust, they are authorized to make decisions about the Trust’s assets. They handle administrative tasks, accounting obligations, and fund or income distribution. They do not make investment choices or advise beneficiaries but may work alongside wealth-management specialists.
A Directed Trustee ensures the assets in a Trust are preserved, distributed according to the Trust agreement, and that all related paperwork is kept up to date.
Directed Trustee vs. Trustee
A Directed Trustee manages specific parts of a Trust without making investment decisions, while a Custodian Trustee handles financial and investment decisions regarding the Trust’s assets.
A regular trustee has broader powers to manage and invest trust assets. In contrast, a directed trustee follows the investment instructions from another authority and acts more like a trust advisor or investment manager.
Directed Trustee in a 401(k) Plan
A trustee-directed 401(k) plan involves a unique trustee who manages and safeguards the plan’s assets based on the investment advisor team’s guidelines. They execute trades, maintain custody of assets, and follow investing guidelines set by plan members or appointed advisors.
Directed vs. Discretionary Trustee
In a directed trust, the trustee follows investment instructions from an authority. In a discretionary trust, the trustee manages and invests the trust assets with more autonomy.
A Directed Trustee handles specific trust aspects without making investment decisions, while a Discretionary Trustee manages and invests the trust’s assets.
Responsibilities of a Directed Trustee
- Following the Trustor’s Instructions: Manage trust assets and make distributions as specified.
- Managing the Custody of Trust Assets: Handle investments, real estate, and other assets, and monitor third-party investment advisors.
- Reporting and Recordkeeping: Maintain accurate records and provide regular financial reports.
- Fiduciary Responsibilities: Manage trust assets with high fiduciary standards, avoiding conflicts of interest.
Why Do You Need a Directed Trustee?
A directed trustee brings expertise in managing various assets, offering flexibility in trust management. They can adapt to changes and ensure the trust meets the trustor’s expectations, making them ideal for complex estate plans or specialized asset management needs.
Conclusion
In summary, a directed trustee is appointed to carry out specific responsibilities according to the trust agreement, offering control, flexibility, and specialized expertise in managing trust assets.
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