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Pinpoint Control Within a Larger Trust – Directed Trusts

On Behalf of | Sep 7, 2010 | Estate Planning |

One of the options available to individuals planning their estate is something called a directed trust. This is a legal device that allows any person with a large amount of assets to put those assets into a larger trust, perhaps managed by a bank or trust company, while designating a third party to manage one specific asset in the trust.

If you were setting up a directed trust, it might look like this:

Let’s keep it simple. Say you own an apartment complex, a collection of classic cars and a fairly large bank account. You put these three groups of assets into a large trust, which will be overseen by a trust company.

However, the trust company does not know anything about the day-to-day management of an apartment complex. While they can protect and distribute assets as regards your car collection and bank account, they cannot manage the shifting responsibilities presented by your apartment complex.

Your brother, however, can. He has helped you run the apartment complex and is the ideal person to continue managing it after you are gone. You want your apartments included in the trust so that they will be protected, but you also want your brother to manage them as the trustee.

Using a directed trust, you can do this. These trusts are often used in cases involving small businesses. Directed trusts allow you to protect your assets, while keeping a tight grip on them via pinpointed control of more sensitive assets.

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