This type of trust lets the trustee delegate some investment management and other functions to co-trustees or qualified investment professionals. In South Dakota, the trustee may delegate these responsibilities directly to investment managers or to a co-trustee who chooses the professionals. Administrative fees may be somewhat higher than in a directed trust due to the proportionally increased risk of taking on some aspects of investment portfolio oversight. In some cases, trustees will insert exoneration language into the trust document or enter into a separate agreement to protect themselves.
- Investment responsibility – The trustee delegates investment management to a third party advisor. The trustee still maintains responsibility for monitoring performance.
- Distribution responsibility – The trustee is responsible for making distribution decisions.
- Administrative responsibility – The trustee handles contributions, distributions and other regular administrative functions including fiduciary accounting and tax preparation.
Descriptions of trusts are intended to be informational and are not specific recommendations. Contact a trust officer at Sterling Trustees for more detailed information on what would be best suited to your circumstances.