Delaware Statutory Trust

A Delaware Statutory Trust is an unincorporated business association created by the execution of a governing instrument, usually a trust agreement, and the completion of a certificate of trust with the Delaware Secretary of State.  Once created, it is recognized as a separate legal entity.
 

The trust agreement is entered into between one or more trustees and one or more persons who are to own beneficial interests in the Delaware Statutory Trust. The trustee must be either:

1. a natural person who is a resident of Delaware, or
2. a partnership, limited partnership, trust, estate, association, corporation or other entity that has its main place of business in Delaware. It may consist of more than one agreement; there could be the trust agreement, and one or more additional operative agreements that establish the rights and powers of the Delaware business trust, the trustee(s) and beneficial owners.

Delaware legislation permits maximum flexibility when establishing a trust, with the potential of having several critical functions performed by nonresidents of the State of Delaware. These are the Investment Advisor, the Trust Protector, and the Distribution Advisor.

Investment Advisor

The investment advisor is the individual named to manage the trust assets and must follow the guidelines established by the grantor in the trust agreement.  Anyone can be named in this capacity; however, it is most common to name a trusted friend, relative, or existing financial advisor.  We require an investment advisor for all of your trusts.

Trust Protector

The trust protector is the individual named in the trust agreement with the power to act as watchdog to monitor the actions and services of the trustee.  In some cases, the grantor is named as the protector, but a spouse or family member is most common. The protector usually is empowered to remove the trustee, change trust jurisdiction, and can veto trustee decisions.

Distribution Advisor

Again, this important function can be performed by anyone, even a nonresident of the State of Delaware.  Normally the grantor selects an individual who has a close relationship with the grantor's family since this advisor will direct the trustee to make distributions to the beneficiaries.  The amount, timing, and needs of the beneficiaries will be best determined by someone familiar with the grantor's family.