As wealth becomes increasingly complex, today’s families rely on a network of specialized advisors - investment managers, estate planners, and family office professionals - each playing a vital role in preserving and growing assets across generations. A directed trust structure enables families to retain these trusted relationships while benefiting from professional trust administration.
Rethinking the Traditional Trustee Model
Traditionally, selecting a trustee meant choosing between two imperfect options:
- A family member or friend - trusted and familiar, but often lacking the expertise required for effective trust administration.
- An institutional trustee - professionally equipped, but potentially rigid, costly, and unfamiliar with the family’s values and dynamics.
While appointing a relative may feel more personal, it can place them in an overwhelming position, often leading to fragmented outsourcing and increased risk. Conversely, institutional trustees may not offer the flexibility needed to retain long-standing advisors or tailor decisions to the family’s unique goals.
The Directed Trust Advantage
Directed trusts offer a modern solution by separating administrative responsibilities from decision-making authority. Jurisdictions such as South Dakota have developed robust statutes that allow families to appoint different individuals or entities to oversee investments, distributions, and other key functions - while a professional trustee handles administration and compliance.
For example, a family may wish to retain their long-time investment advisor to manage the trust’s portfolio, while appointing a close friend to oversee beneficiary distributions. A directed trust structure makes this possible - ensuring each role is filled by the person best suited to it.
As a directed trustee, Trident Trust executes instructions from your appointed advisors, assuming fiduciary responsibility while preserving the family’s preferred relationships and governance structure.
Why South Dakota?
South Dakota’s directed trust laws are among the most flexible and protective in the United States. Key advantages include:
- Clear division of fiduciary duties, allowing investment and distribution advisors to act independently without unintended liability.
- Recognition of advisory committees, enabling collaborative decision-making.
- Use of special-purpose entities as trust advisors, preserving privacy and control without triggering regulatory oversight.
- Legal recognition of non-fiduciary roles, such as trust protectors and family advisors, with defined protections.
This framework empowers families to build governance structures that reflect their values, relationships, and long-term planning goals—without compromising on professionalism or compliance.
Partnering With Trident Trust
At Trident Trust, we work closely with clients and their advisors to design directed trust structures that deliver flexibility, continuity, and peace of mind. Our experience in South Dakota and other leading jurisdictions allows us to support families in building tailored solutions that evolve with their needs.
To learn more about how directed trusts can support your planning goals, please speak with your usual Trident Trust representative or reach out to Pete Randazzo, Head of our South Dakota office, at prandazzo@tridenttrust.com.