Wyoming Directed Trusts

The Directed Trust model works well for families that desire a corporate trustee for administrative and situs purposes but want to engage family members and existing advisory relationships in investment or distribution activities. It is also effective for families that own complex assets, such as operating businesses, real estate, or concentrated positions.

The trustee of a trust is a fiduciary responsible for decisions regarding investment of trust assets and distributions to beneficiaries along with administrative duties such as records retention, tax compliance, and beneficiary reporting. Under Wyoming law, a trust may “unbundle” these services and allow each trustee function to be performed by a different person or entity. This unbundled structure is known as a Directed Trust. A Directed Trust may provide for a Trust or Investment Advisor to manage trust assets and investments, a Trust or Distribution Advisor to manage distributions from the trust, and an Administrative Trustee to provide administrative and compliance services in the chosen jurisdiction. The Investment Advisor and Distribution Advisor roles may also be performed by a committee, if desired. The Administrative Trustee may only make investments or distributions at the direction of the relevant advisor or committee.

The Directed Trust model works well for families that desire a corporate trustee for administrative and situs purposes but want to engage family members and existing advisory relationships in investment or distribution activities. It is also effective for families that own complex assets, such as operating businesses, real estate, or concentrated positions.

Benefits of a Directed Trust

  • Enhanced Control: The Directed Trust allows a family member or trusted advisor, subject to tax considerations, to make investment or distribution decisions. The settlor or beneficiaries may be able to participate in subsequent removal and appointment of Investment or Distribution Advisors.
  • Wyoming Situs: The Directed Trust allows for administration and, if requested, distribution decisions to occur within Wyoming while retaining existing investment advisory relationships.
  • Flexibility: The Directed Trust provides increased flexibility as to asset management, distribution decisions, and efficient decision-making.
  • Cost Savings: The Directed Trust may provide substantial cost savings over traditional corporate trustee relationships.

How does a Directed Trust function?

For new Wyoming trusts, implementing a directed trust structure is a straightforward matter of drafting the trust to provide for a Trust or Investment Advisor, a Distribution Advisor, or other fiduciary roles as the client may determine. For existing trusts that do not contemplate the directed trust structure, the qualified beneficiaries of the trust may unanimously agree to designate a Trust Advisor with the power to direct the trustee, typically via a Non-Judicial Settlement Agreement.

Willow Street Trust Company of Wyoming, LLC (WSTC) works closely with families and their advisory teams to implement and administer trust structures in a manner consistent with the strategic and financial goals of our clients. WSTC serves as Administrative Trustee for clients seeking to situs entities and assets in Wyoming, providing record management and retention, cash management, bookkeeping / billpay, compliance, tax reporting and payment coordination, and document execution and signature authority services.

WSTC may also hold discretion as to distributions upon request, either individually or as part of a Distribution Committee. Because WSTC serves as a fiduciary and trust administrator, we seek to avoid real or perceived conflicts of interest when serving in these capacities; for this reason, WSTC does not offer Investment Management services.

Please contact us for more information.

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