What Is a Directed Trust and How Does It Work?

What Is a Directed Trust and How Does It Work?

Estate plans ensure your assets go to the people you care most for. Despite their importance, a shocking 67 percent of adults in the United States do not have a will or trust established. These individuals risk having their belongings go through the probate court process should something happen.

Trusts are a fantastic resource for protecting money and assets when passing them down to relatives and friends. A directed trust is worth considering when planning for your later years. It’s fair to wonder, “What is a directed trust?”

If you’re ready to take steps to protect your assets, you’ve found the right spot. Read on to learn more about directed trusts and their benefits today!

What Is a Directed Trust?

Directed trusts are defined by the multiple parties who share responsibilities for the assets and execution of the trust. The Trust Advisor and Directed Trustee are the two primary parties involved in the process with a trust IRA.

The directed trustee is not responsible for making financial decisions or distributing the assets. Other parties include the Trustor and the Beneficiary.

The Directed Trustee is directed by the other parties involved in the trust. They have the ultimate say in executing the trust and are solely responsible for implementing what the different parties would like done.

Benefits of a Directed Trust

If you’re proceeding with estate planning but need help determining which trust to choose, exploring the benefits can lead you to the best outcome. You’ll enjoy several advantages when you select Directed Trusts for your assets. Here’s a closer examination of what you can expect.

Flexibility and Control

Trusts offer more flexibility and control than other estate planning options. Clients maintain control over the financial decisions and disbursements from the trust.

Families can also use multiple mechanisms to protect the trust as family wealth grows. It’s the best option if flexibility and control are your priorities.

High Standards

Directed trusts are subject to regulations and enjoy a solid operational structure. The trustee is tasked with handling bookkeeping and basic tasks. Meanwhile, advisors manage family needs involving the trust.

Both parties are allowed to do what they’re best at. It results in the ideal outcome for the family involved in the trust.

Future Protection

The ultimate purpose of starting a trust is to protect your assets and family. Your family will enjoy continuity of service as the years pass, ensuring they receive guidance on disbursements, investments, and other financial matters. Choose a trust director who is familiar with the long-term goals and vision for the best results.

Set Up a Directed Trust for Your Assets

Knowing the basics of “What is a directed trust?” is essential to protecting your family, assets, and wealth. Direct trusts pair multiple parties to determine the best use of assets and funds and handle beneficiary disbursements. They’re the best option for control, flexibility, and future protection while eliminating the risk of probate court.

Financial management is essential to enjoying a comfortable and happy life with your loved ones. Check out our Finance blog for more tips and tricks on building wealth today!

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