Delegated or Directed Trust

Definitive Guide on a Delegated or Directed Trust

Delegated or Directed Trust – Everyone has confusion on the pros and cons of each.  Directed trusts are newish (e.g. last 30 years).  Delegated trusts have been around since the 1300’s.  From a trust administration perspective, the biggest difference between the two rests on the trustee level of risk. 

Delegated or Directed Trust – A Reasoning for Two options

Any trustee, if taking a fee and acting as a fiduciary, reviews their duties and obligations for two key issues: their risk and their time. Trust documents outline a trustee risks very well.  Around 30 years ago, several states such as Alaska, Delaware, Nevada, and South Dakota began adding more robust control and choice options to grantors.  These extra controls and choices can reduce the risk to a trustee.  A delegated or directed trust provides options which a grantor needs to consider around the philosophy of their wealth and family. 

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Definitive Guide on Trust Law, a Trust Fund, & Trustee Industry 2019

Advisors have the option to use a trust fund company that does not compete against them. There will be an avalanche of asset transfers between generations over the next 30 years. This blog provides information on the past, present, and future of trust law and the trustee industry. This information will help advisors to make informed decisions on clients’ generational planning choices, and to attract and retain assets.

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Directed Trusts : The Ins and Outs

Directed trusts separates who manages the trust assets and who administers the trust assets.  This rule gives everyone loads of flexibility for anyone using a trust under South Dakota trust laws.  It allows a person to place her property—both investment and business assets—in trust for heirs as income producing property. This process involves directing the control of the management of trust assets to third party such as a financial advisor, family member or family office but not the corporate trustee. A South Dakota Directed Trust is unique because it allows a ‘donor’ (trust geek speak – grantor) to use a decide who will manage, preserve, enhance, and accrue value for all sorts of property placed in a trust.  These assets can include more than stocks, bonds, mutual funds—ranches, mom and pop shops, apartment complexes, valuable artwork, or even jewelry.

South Dakota’s Directed Trust laws allow grantors to split-up the fiduciary responsibilities and duties that normally tag along with financial investments.  A complex situation traditional and unique assets would have a financial advisor managing/overseeing the marketable securities and a hospitality specialist to manage the day-to-day operations of your fast food franchises.  The corporate trustee would only focus on the trust accounting and administration. This also typically results in lower fees because the primary wealth advisor and all parties involved are responsible for fewer burdens.

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South Dakota Trust Law Benefits: 5 Reasons They Make Sense For You

A marker of wealth is often the reluctance to talk about it. Don’t talk about it, be about it. South Dakota trust benefits allow for exactly that. South Dakota’s lawmakers were wise beyond their years when they passed attractive trust laws. These laws have placed South Dakota’s trust benefits among the top in the country.  Flexible with time, the laws have evolved with the needs of estate attorneys and their clients.  Other states such as Tennessee, Nevada, New Hampshire, and Delaware also provide trust benefits.  But none of them can touch South Dakota.


South Dakota’s trust benefits range from (1) no state income tax, (2) dynastic trusts, (3) asset protection, (4) directed trusts, and (5) some of the leading privacy rules in the nation. These laws run the gamut of financial protection and service and in this South Dakota Trust Laws series, we explore them. 

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