Technical article
Directed Trusts Explained: The Family Picks the Investments, a Licensed Trustee Holds Title
In a directed trust, a family member or a committee controls investments or distributions while a corporate trustee handles administration.
Imagine a family with US$8 million in a trust, as an example. The parents want their son, who works in finance, to pick the investments. They also want a licensed company to handle the paperwork and tax filings. A traditional trust gives all those jobs to one trustee. A directed trust splits them.
How the jobs are split
In a directed trust, a family member or a committee controls investments or distributions while a corporate trustee handles administration. A Nevada trust company's wording shows how far the split can go. The directed trustee acts on orders from an investment adviser, a distribution adviser, a special-holdings adviser or a trust protector. It has no duty to watch them.
| Role | Does what | Duty in the Uniform Directed Trust Act |
|---|---|---|
| Administrative trustee | Handles administration, filings and compliance, and follows directions | Protected if it complies reasonably, but must not carry out a direction that is willful misconduct |
| Investment adviser | Directs the buying, keeping and selling | Treated as a fiduciary, though the trust can soften that |
| Distribution adviser | Directs or approves payments to beneficiaries | Treated as a fiduciary, though the trust can soften that |
| Protector | May remove and replace the roles above, depending on the deed | Set by the deed and the state |
The Uniform Directed Trust Act was approved in 2017. By January 2025, 18 states had enacted it, according to the foundation of the American College of Trust and Estate Counsel. Earlier counts were 16 in July 2023 and, in a 2026 trust-company article, 17. The counts come from different dates and may not disagree. Delaware and Nevada are exceptions where the deed can make the director a non-fiduciary. Michigan's version bars removing the director's fiduciary duty.
A wealth adviser's own affiliated trust company can act as directed trustee, handling filings and compliance while the adviser's team runs the investments. This is how one trust company describes its own model.
What it costs
One bank's January 2026 schedule shows how the price changes when the investments go to an outside adviser.
| Fee | Directed personal trust | Delegated personal trust |
|---|---|---|
| First US$1 million | 0.50% | 0.65% |
| Second band | 0.40% | 0.53% |
| Third band | 0.35% | 0.48% |
| Over US$5 million | Negotiable | Negotiable |
| Minimum a year | US$5,000 | US$6,000 |
A directed account also needs a custodial account for the adviser, which costs US$1,000 a year at that bank. The bank has no duty to review or watch the adviser and is not liable for the adviser's fees beyond its own administration fees.
A South Dakota trust company lists directed trusts at an average of 0.10% plus US$1,000 per line item, with a US$5,500 minimum. Its delegated trusts run 0.20% to 0.50%, with a minimum of US$5,500 to 7,500, and it says its average trust is about US$30 million. A Deutsche Bank schedule lists a US$15,000 minimum a year for a trust and US$15,000 a year for a directed administrative trustee. These are three different firms' published figures, so they will not line up.
You could
You could ask the trustee for both fee schedules and ask what the extra custodial account costs. You could ask who the adviser is, whether the adviser is a fiduciary under the deed, and what happens if the adviser steps down.
If your family has used a directed trust, which role was hardest to fill? Share it here. Someone else may be looking for the same person.
Figures are estimates for planning, based on public data. Date read: October 2026.
Sources
- ACTEC Foundation (American College of Trust and Estate Counsel)
- Uniform Directed Trust Act podcasts, July 2023 and January 2025 (B)
- BOK Financial Advisor Trust Services fee schedule, January 2026 (C)
- JTC South Dakota Trust Company fact sheet, about July 2024 (C)
- Deutsche Bank wealth fiduciary fee policy, November 2025 (C)
- Northern Trust Nevada trust wording, 2015 form (C)
- Mariner Wealth Advisors directed trustee article, September 2024 (C)
- J.P. Morgan trust myths article, December 2025 (C)
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