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Chisholm Law Group, LLC
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Understanding Directed Trusts In Maryland: Structure, Benefits And Considerations

Estate planning requires flexibility and protection. Traditional trusts burden single trustees with all duties. This creates challenges requiring specialized knowledge. Directed trusts under Maryland law offer smart solutions. They separate trust tasks among multiple parties. This structure benefits families with complex assets that require professional investment management alongside administrative oversight. It aligns with your planning goals.

Our attorneys are here to help you understand how directed trusts work and whether this approach aligns with your estate planning goals.

What Are Directed Trusts Under The Maryland Trust Act?

A directed trust is a special type of trust recognized under Maryland law. It splits traditional trustee duties among different people or companies. Rather than having one trustee handle everything, the Maryland Trust Act allows you to assign specific individuals or groups to handle specific tasks. This separation means one party might handle investments. Another manages paperwork or distributions. The framework provides legal recognition for these divided duties. This protects each party within their assigned area of responsibility.

How Do The Administrative Trustee, Investment Adviser And Distribution Adviser Work Together?

In a directed trust, there are three distinct roles:

  • The administrative trustee handles day-to-day operations. This includes recordkeeping, tax filings and following trust terms.
  • The investment advisor makes decisions about how trust assets are invested. This potentially brings specialized market knowledge to the table.
  • The distribution advisor determines when and how much beneficiaries receive. This can be particularly valuable when family relationships are complex.

These roles work independently within their areas. They create a system of checks and balances that can benefit your beneficiaries.

Why Is Separating Investment Management From Administrative Oversight Beneficial?

Separating duties offers major benefits for many families. Professional investment firms can manage your portfolio while staying out of family distribution decisions. At the same time, family members or trusted advisers can handle paperwork without needing advanced investment knowledge. This division often leads to better investment performance and distribution decisions that fit beneficiary needs.

What Liability Protections Exist for Excluded Trustees?

Maryland law provides important protections for trustees with limited duties. Under Maryland law, an excluded trustee is generally relieved of liability for following directions, provided that complying with the direction does not constitute willful misconduct or a known breach of fiduciary duty. This protection encourages qualified professionals to serve in specific roles without fear of being responsible for matters outside their control.

Contact Us Today

We are ready to discuss whether a directed trust fits your family’s unique situation. Contact Chisholm Law Group, LLC, at 844-991-1392 today to schedule a consultation and explore your options.