Technical article
Who Can Change the Investments After the Trust Starts, and Can My Children?
In a directed trust, a separate investment adviser holds that power.
Imagine a widower in Ohio who sets up a trust for his daughter and her two children. Ten years on, he is gone. The daughter reads the investment list and wants to change it. Who is allowed to?
The answer sits in the deed. Three people may hold the pen.
The trustee, the adviser and the protector
By default the trustee runs the investments. That is the ordinary trust.
In a directed trust, a separate investment adviser holds that power. South Dakota's law says an adviser may direct the trustee on keeping, buying, selling, exchanging, lending and pledging investments. The adviser may vote proxies, pick other managers, including the trustee, and set the value of investments that do not trade publicly. These powers are exercised in the adviser's "sole and absolute discretion" and bind the trustee.
A protector sits above both. South Dakota lists 18 powers a protector can be given. They include removing and appointing a trustee or adviser, vetoing or directing distributions, changing the governing law or the place of the trust, amending for tax law changes and ending the trust. Nevada also lets a protector amend the trust to respond to changes in tax law, and a Nevada protector's decisions bind everyone else.
| Who | What they can do | Where the power comes from |
|---|---|---|
| Trustee | Run the investments, unless the deed hands them to someone else | The deed and the state's trust law |
| Investment adviser | Direct buying, selling, lending, voting and manager choice | The deed; South Dakota and Nevada list the powers |
| Protector | Remove the trustee or adviser, veto, move the trust, amend for law changes | The deed; South Dakota lists 18 powers |
Can my children hold a pen?
They can, if the deed names them. A child may be named adviser or protector. Wyoming's published text goes further. All the qualified beneficiaries together may name an investment adviser, unless the trust forbids it. The text we read is undated and may not match today's code.
A protector who is also a beneficiary needs care. One law-firm guide says a protector who can override the settlor and direct assets to himself may be treated as holding a general power of appointment. Another article here looks at that.
Changing the trust later
A trust that is already running can still change. The sources name four routes.
| Route | How it works | What the sources add |
|---|---|---|
| Decanting | The trustee moves the assets into a new trust with different terms | About 42 states had a decanting law by September 2025, up from about 23 in a 2016 article. The trustee generally needs power to invade principal. The new trust must include an old beneficiary and cannot add new ones. |
| Settlement agreement | The people involved agree to change the terms without a judge | Under the Uniform Trust Code, minor terms can change this way. Material terms usually need court approval. About 36 states and jurisdictions had a version of that code by 2022. |
| Court modification or reformation | A judge changes or corrects the terms | Courts are reluctant to override the settlor's wishes. It can be costly and public. |
| Protector clause | The protector uses a power written into the deed | No court step is needed when the deed gives the power. |
You could
You could ask the lawyer to write, in one page, who can change the investments, who can remove the trustee and what happens when the adviser dies. You could ask whether decanting is open in the state you choose.
If your children inherit the pen, what would you want them to hear from you before they hold it? Share it here. Someone else may be writing that letter now.
Figures are estimates for planning, based on public data. Date read: October 2026.
Sources
- South Dakota Legislature, statutes 55-1B-10 and 55-1B-6 (A)
- Nevada Legislature, statute 163.5553 (A)
- Wyoming Legislature, W.S. 4-10-718, undated (A)
- ArentFox Schiff trust modification alert, September 2025 (B)
- Financial Planning Association Journal, March 2016 (B)
- ACTEC count of Uniform Trust Code states, 2022 (B)
- RMO LLP guide to trust protectors, 2026 (C)
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