Before establishing a DAPT, we advise our clients in selecting one of the leading DAPT states for trust domicile. Then, we provide advice on engaging an experienced and competitive corporate trustee in the state to provide administrative services to the trust, such as fiduciary accounting, recordkeeping and the preparation and filing of state fiduciary tax returns.
While we design our DAPT trusts to provide flexibility for changing laws and circumstances, we cannot know for certain what the world will look like in the years to come. For example, what will be the relationship between trustee and beneficiaries or where will beneficiaries reside. Thus, the use of a Trust Protector, with power to remove and replace the trustee, or even reshape your trust over time, is a key tool for effective trust planning.
Liberty Street Advisory Group will advise you in appointing a trustee you are comfortable with and who understands your intentions. But circumstances can always change, so we recommend having a Trust Protector appointed who can remove and replace the trustee and work with your other trust advisors to monitor the estate administration over time.
If a dispute arises, the Trust Protector can have the power to make changes without going to court. Or, the Trust Protector may be authorized to add or subtract beneficiaries, such as grandchildren or great-grandchildren or alter trust assets — an important role in long-term, intergenerational trusts, particularly in a growing family. Suppose estate laws change again as they did in 2011. A trust protector could decide on how the trust could be updated to maximize tax benefits. You may also need to monitor a special needs trust for a disabled child. A Trust Protector can perform that function and keep abreast of changes in public benefits, medical treatment, investments and the needs of the beneficiaries. All of our trusts are drafted to specify exactly what a Trust Protector may and may not do.
Trust advisors have the power to control the trustee in the exercise of some or all of its powers. Often our DAPTs create a Trust Distribution Advisor with power to direct distributions and a Trust Investment Advisor, with power to direct investments. These roles are important because DAPTs and Dynasty Trusts may be in effect for several decades, or even longer. Trust advisors also may be given the power to make sure the grantor’s intentions are fulfilled.