When discussing the advantages of trusts and the duties of trustees with clients, we are often asked the challenging question, “Who should serve as my trustee?”  Before now, the answer to this question left clients to choose between the professional management of a corporate trust department or an individual, who, often times, is a close friend or family member.  While each scenario offers certain advantages and disadvantages, clients often feel dissatisfied with having to name one or the other.  The good news is that Connecticut recently adopted the Connecticut Directed Trust Act which allows individuals to name multiple separate fiduciaries to administer trusts.  

In general, trustees play three (3) roles in administering trusts: (1) to invest trust assets; (2) to distribute trust assets to beneficiaries; and (3) to file tax returns, notices and accountings.  With this new legislation, individuals may now designate different parties to fulfill each of these distinct roles.  For example, clients may wish to name an investment management company to handle the trust investments and a friend/relative, who has a closer relationship with trust beneficiaries, to handle the distributions.  In this example, the investment management company can be named as a trust investment director and the friend/relative can be named as a trust distribution director.  In addition, a third party (or one of the above named directors) can be named a trustee to handle the administrative filings.  If a client is setting up an irrevocable trust for the benefit of family members, the client may be the investment director (subject to certain restrictions) while another person may be the distribution director.

The Connecticut Directed Trust Act provides two significant advantages.  The first is that clients are no longer limited to selecting one fiduciary to manage all aspects of trust administration.  They can utilize the unique value and strengths of different parties for each of the customary trustee roles.  The second is that each trust director will, in most cases, have limited or no liability for the actions of the other trust directors.   This benefit will allow clients greater flexibility to create trusts with non-customary trust assets, such as stock in a closely held business or certain classes of real estate.  Although it can be argued that naming multiple trust directors makes matters more complicated, we feel clients will be better served with this “best in class” approach.  For more information, please contact James M. Powers (jpowers@brodywilk.com) or another BW attorney.