Have you ever heard of the legal concept of directed trust? If so, you may have limited information on what it is and its usefulness in modern business practices. In general, directed trusts are contractual arrangements that empower a third-party to manage and restrain your assets, in order to accomplish a particular purpose.
It is important to note that when creating a directed trust, the trustee (the individual responsible for the management of the assets) is delegated their duties by the creator of the trust, known as the grantor. This particular structure allows assets to be managed in a secure fashion and honours the purpose and intentions of the grantor.
Why Are Directed Trusts Used?
Directed trusts are used in a variety of circumstances, including estate planning and asset protection. An estate planning directed trust could, for example, be used to help the grantor transfer assets to their heirs in a tax efficient manner. An asset protection directed trust could be used by the grantor to prevent their assets from being seized in a lawsuit.
In addition, directed trusts can be used to manage assets in a manner that adheres to specific ethical or moral standards. For example, a grantor may wish to establish a trust that only funds investments that adhere to ethical or religious guidelines. Directed trusts can also be used in other scenarios, such as to ensure that environmental regulations are adhered to when a company acquires land.
The Benefits of Directed Trusts
The primary advantage of directed trusts is that they provide a way for grantors to make sure their assets and funds are managed and allocated to accomplish their specific purpose. Directed trusts enable asset owners to retain control of their property and assets in a secure and effective manner. Furthermore, the trustee’s duties are circumscribed to carry out the specific trust purpose, thus relieving the grantor from the responsibility of managing the assets.
In today’s business world, directed trusts can be used as a tool to ensure that assets and funds are managed responsibly and with the intentions of the grantor in mind. With careful thought and consideration, directed trusts can be an effective and secure way to manage property and assets in an ethical manner.