What are Directed Agency Trusts?
Traditionally, the trustee of a trust performs two tasks, (1) trust administration and (2) the investing of the trust’s assets.
However, for some trusts this is not so. In those cases the trusts are referred to as agency trusts or directed agency trusts.
A directed agency trust is a trust where the administration and the investing duties are separated. The trustee of an agency trust performs only the administrative duties and the responsibility for investing the trust’s assets is directed elsewhere (for example, a brokerage firm, investment manager or other fiduciary).
Why are there Directed Agency Trusts?
Agency trusts exist to accommodate the trust grantor or the trust beneficiary who want to select their own investment advisor.
Agency trusts exist to accommodate the trust grantor or the trust beneficiary who want to have a say in how their trust assets are invested.
Agency trusts exist to accommodate the trust grantor or the trust beneficiary who want to keep their current financial advisors.
Is there special documentation for Directed Agency Trusts?
The answer is yes. Let's consider the Settlement Preservation Trust (SPT) as an example. The basic SPT document has been amended but only to the extent that the trustee is being released from the obligation and responsibility for investing the trust's assets.
Otherwise, for all intent and purposed, the SPT document functions the same for all SPTs whether or not the SPT has been designated as a directed agency trust.
In addition to an amended SPT document, an "Assignment of Investment Duties" is required of all directed agency trusts. This document relieves the trustee of its investing responsibility.
What are the qualifications needed in order to place Directed Agency Trust business?
The Directed Agency Trust allows you to:
Select your own investment advisor.
Have a say in how your trust assets are invested.
Keep your current financial advisors
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