The Directed Trust and Wealth Management

What is a Directed Trust? 

A Directed Trust is a specialized form of a standard Trust. A standard Trust is a financial arrangement which allows a trustee to hold funds or assets on behalf of a beneficiary. In a Directed Trust, the account holder can direct the management and distribution of the funds. In both cases, benefits include wealth building tax strategies and asset protection from external parties.  

How does a Directed Trust work? 

Trusts work with a 3-point system of management: 

  • An Investment Manager advises and manages the Trust’s assets. 
  • A Distribution Committee decides who will receive distributions and under what circumstances. 
  • An Administrative Trustee provides the legal and tax services which allows the Trust to function. 

In a Directed Trust, the account holder can direct each of these roles. Private financial teams can be brought in to assist with Investment Management, the account holder can personally direct distributions, and the Trust company will take care of the technical implementation. 

Why is South Dakota a good base for a Directed Trust? 

South Dakota has enacted a number of legislative statutes which make the state especially favorable for the establishment of a Directed Trust. 

  • South Dakota possesses no state income tax which allows wealth to grow without any unnecessary reduction.  
  • There is no law against perpetuities. This means that a Directed Trust can last as long as desired and avoid federal estate tax for the entire duration of the Trust.    
  • South Dakota’s strong spendthrift provisions protect clients and their assets from the aggressive claims of creditors. 

Why Madison Trust? 

Madison Trust brings together the industry’s highest rated Trust company with the superior legal protection of South Dakota. We understand these funds are dedicated for your family and we want to give you every advantage available.  

  • The Madison team operates with a “client-first” philosophy and places the highest priority on our clients’ needs.  
  • Madison works with you to find the account structure that best suits your financial needs. Then, we provide the tools to make it happen. You can retain the right to direct investments and distributions or you can rely on the Madison team to deliver your vision. Whatever your funds need, we can find a workable solution. 
  • For Directed Trust services, Madison has partnered with the Corundum Trust Company to provide exceptional back-end management. 
  • Madison’s attention to detail, efficiency of process, and dedication to client support has catapulted it to become the industry’s highest rated Self Directed Trust company. 

Who should take advantage of a Directed Trust? 

The Directed Trust is a fit for those who have substantial assets which will not be used to fund retirement. With a Directed Trust, you can manage those funds and optimize your family’s continued wealth. This platform ensures a smooth financial transition for your loved ones while maintaining your direction of the funds in the present. 

Taking it further with a Directed Trust 

Are you ready to ensure the security of your wealth and take control? Speak with a Madison Specialist and get educated on how a Directed Trust can work for your estate. Please schedule a call here

Interested to learn more about Directed Trusts?

Have Questions?

Read our FAQs, or feel free to contact our team directly.

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