Delaware offers these distinct advantages for directed trusts:

• Favorable trust laws: Delaware has some of the most flexible trust laws in the United States, which allow for greater control and flexibility in trust design and administration, including the use of directed trusts.
• No state income tax: Delaware does not impose a state income tax on trust income for trusts with non-resident grantors and beneficiaries. This can result in significant tax savings for high-net-worth individuals living in states with high state-income tax environments.
• Trust protector powers: A trust protector may have all the powers granted by the terms of the trust, including the power to remove and replace trustees, advisers, trust committee members, and other protectors, modify or amend a trust to achieve favorable tax status or to facilitate the efficient administration of the trust, and modify, expand or restrict terms of a power of appointment granted a beneficiary by the terms of the trust. The trust protector is considered an “adviser” for purposes of duties and liabilities.
• Separation of trustee powers: Delaware’s directed trust statute permits the appointment of separate trustees with specific powers for administrative, investment, and distribution duties, allowing for greater flexibility in trust design and administration.
• Fiduciary status for trust advisers and protectors: Advisers and protectors granted authority to direct, consent to, or disapprove trustee’s investment, distribution, and other decisions of the trustee are fiduciaries, unless the trust provides that they act in a non-fiduciary capacity.
• Protection for directed trustees: If the trust instrument requires a directed trustee to follow the direction of an adviser, the trustee is not liable for following the adviser’s direction except in cases of willful misconduct by the directed trustee. The directed trustee has no duty to monitor the conduct of the adviser.

Note: The information provided here is for general educational and informational purposes only. It is not legal advice and should not be interpreted as such. For a thorough understanding of these topics relevant to your specific circumstances, we recommend consulting a qualified estate planning attorney. Peak Trust Company cannot provide legal advice; however, we can serve as an informational resource and provide referrals to highly skilled attorneys who can offer legal and tax guidance tailored to your specific needs.