You often hear that Delaware is a “trust friendly state.” The reason is because Delaware has focused on generational planning for high net worth families. It has enacted fiduciary laws to allow for modifications within irrevocable documents. It allows for trust assets to pass from one generation to the next in perpetuity. It also defines what duties are performed by a corporate trustee versus individual advisors. For example: A grantor can appoint family members to be Trust Protectors with the role of changing trustees or amending irrevocable trust documents should there be changes in laws that would be advantageous to the family. Your trust can name Distribution Advisors to make distributions to family member’s or charities without specifying an amount. The benefit is to allow for the changing needs of future beneficiaries or charities that are no longer in line with the family’s values. There is also a benefit to naming Investment Advisors. An example of that is to instruct the trustee to hold a concentration of stock or closely held business interest. Many families that I have dealt with, have had and wanted to continue to hold onto Coca-Cola stock. A corporate fiduciary is typically required to sell down concentrated stocks that family members may want to hold onto. By naming an investment advisor in your trust, the investment advisor could instruct the corporate trustee not to sell certain stocks.
Delaware law also allows for Non-Judicial Settlement Agreements. This Agreement keeps family members and trustees from having to go to court for permissible modifications to a trust document. Through the use of a Non-Judicial Settlement Agreement, whereby all parties agree to certain changes, you can make a restrictive document more in line with the needs of current beneficiaries.
A number of other states have followed Delaware’s lead in fiduciary planning, but Delaware was the first state to enact such favorable fiduciary laws. There are numerous other reasons why individuals choose Delaware for their estate planning needs. At First State Trust Company we administer both personal and institutional trusts and can help you navigate the many issues surrounding trusts. Please let me know how I can help you with your estate planning needs. Contact me at: firstname.lastname@example.org.
The posts expressed are views of FSTC and are not intended as advice or recommendations. For informational purposes only.