A directed trustee agreement is an essential document that outlines the responsibilities and roles of a directed trustee in managing a trust. In a directed trust, the trustee is directed by a third party, usually an investment advisor, on how to manage the assets in the trust. The directed trustee agreement ensures that the trustee and the investment advisor work together in a coordinated manner to achieve the goals of the trust.
The directed trustee agreement identifies the parties involved in the agreement, including the grantor of the trust, the trustee, and the investment advisor. It also outlines the powers and duties of the trustee, the investment advisor, and any other party involved in the trust management. The agreement may specify the types of assets that the trustee can manage, the investment strategies to be used, and the performance targets that the trustee must meet.
The directed trustee agreement also contains provisions for monitoring and reporting on the trustee`s performance. It may require the trustee to provide regular reports on the trust`s status, including its investment performance, income, and expenses. The investment advisor may also be required to provide reports on the investment strategy, performance, and any changes made to the investment plan.
One of the essential features of a directed trustee agreement is the allocation of liability between the trustee and the investment advisor. The agreement may specify the circumstances under which the investment advisor will be liable for any losses incurred by the trust and the extent of that liability. It may also outline the circumstances under which the trustee can be held responsible for any losses and the extent of that liability.
The directed trustee agreement should be comprehensive and detailed to avoid any confusion or disputes between the parties involved. It is essential to consult with legal experts in drafting the agreement to ensure it complies with all applicable laws and regulations. The agreement should be reviewed and updated regularly to reflect any changes in the trust`s goals, the investment strategy, and any other factors that may impact the trust`s performance.
In conclusion, a directed trustee agreement is an essential document that defines the roles, responsibilities, and liabilities of the trustee and investment advisor in managing a trust. It ensures that both parties work together to achieve the trust`s goals and protect the beneficiaries` interests. It is prudent to consult with experts in drafting the agreement to ensure it is comprehensive, legally compliant, and up-to-date with the latest regulations and best practices.