The South Dakota Family Advisor: “Trust Protector Light”

Proving once again South Dakota’s status as the premier U.S. trust jurisdiction and the vital importance of proper situs selection in the trust planning process, South Dakota is the first state in the nation to enact progressive new legislation creating the South Dakota Family Advisor (for a definition of terms, reference 55-1B-1). The Family Advisor is yet another South Dakota modern trust law tool that delivers far more control to settlors of trusts, beneficiaries, and their advisors than ever before when used in conjunction with a Directed Trust.

The Family Advisor role, similar to the Trust Protector but acting as a NON-FIDUCIARY, has the power to modify, control, and participate in many important aspects of trust administration. The powers that may be granted to the Family Advisor are:

(1) Remove and appoint a trustee, a fiduciary provided for in the governing trust instrument, trust advisor, investment committee member, or distribution committee member;

(2) Appoint a successor trust protector or a successor family advisor;

(3) Advise the trustee on matters concerning any beneficiary; receive trust accountings, investment reports, and other information from the trustee or to which a beneficiary is entitled; attend meetings whether in person or by any other means with the trustee, investment trust advisors, distribution trust advisors, or other advisors whether in person or by any means, electronic or otherwise; and to consult with a fiduciary regarding both fiduciary and non-fiduciary matters or actions, all without any power or discretion to take any action as a fiduciary; or

(4) Provide direction regarding notification of qualified beneficiaries pursuant to § 55-2-13.

Appropriately referred to as a “Trust Protector Light”, because of its non-fiduciary status and limited powers, the South Dakota Family Advisor is an excellent option for settlors of trusts and beneficiaries who may want family advisors, such as attorneys, CPAs, or investment advisors to have some control and input over important aspects of trust administration without elevating the position to that of a  fiduciary, which carries with it heightened liability that may deter advisors from serving.

The Family Advisor, only available under South Dakota law, is yet another affirmation of South Dakota’s status as the most progressive trust jurisdiction in the nation. For more information about how Family Advisors can be incorporated into the trust planning process, please contact Bridgeford Trust via our contact page.

To learn more about South Dakota’s industry leading modern trust laws, including Trust Protector, Directed Trusts, Decanting, Modification, and Reformation, please click here for more information.