Keystone Lawfirm and Wealth partners

Directed Trust: Good for My Business?

Directed Trust: Good for My Business?

Business owners have special estate planning needs. After all, they’re not just handing down a pile of cash, the family homestead, and Grandma’s antique armoire. Their companies have customers, vendors, and employees that rely on the company’s continued operation. Even if the owner is incapacitated or passes away, orders must be fulfilled, vendors paid, and employees still employed. Sometimes businesses are placed in trusts, including directed trusts.

Directed Trust Defined

Trusts are commonly used in estate planning. Revocable, irrevocable, special needs, charitable, and spendthrift are some of the different types of trusts created to handle specific situations. Typically, trusts have a trustor who gives a trustee powers over property and assets that benefit at least one beneficiary.

Trustees, especially corporate trustees, may be reluctant to take on management of a trust that consists primarily of assets held in a family corporation. The solution may possibly be to use a directed trust.

With a directed trust, the trustee’s duties are split between a directing party and a directed trustee. The directed trustee takes on responsibilities at the direction of a directing party, like the trustor. This individual might handle administrative tasks and disbursements, for example, while the directing party manages assets and investments.

Directed Trust’s Effect on Business

When placing company assets in a trust, the business owner may want to maintain control of the company. After all, an owner may have spent years building a company and be reluctant to turn loose the reins to someone who doesn’t have the same interest or experience.

A directed trust allows an individual to control an investment that is part of the trust, like a business, while handing off administrative tasks to the directed trustee.

Directed trusts may lead to better management of assets, especially where company assets are involved.

Does Your Business Need a Directed Trust?

Francisco Sirvent has the know-how to analyze your current situation and help you make thoughtful decisions about your business. Call us at (480) 418-8448 to set up an appointment. Although located in Chandler, we also work with clients in the surrounding communities like Sun Lakes. Gilbert, Mesa, and Tempe.


Posted on: January 3rd, 2018 by Sheryl Keeme   Business  |  Estate Planning
"Without counsel plans fail, but with many advisers they succeed." Proverbs 15:22