Directed trust

Where the statute uses it: Minn. Stat. § 501C.0808

What it means

Splitting the trustee’s job in three. Section 501C.0808 lets a governing instrument name an investment trust advisor, a distribution trust advisor, or a trust protector, and collects all three under one term.

"Excluded fiduciary" means one or more fiduciaries that by the governing instrument are directed to act in accordance with the exercise of specified powers by a directing party, in which case such specified powers shall be deemed granted not to the fiduciary but to the directing party and such fiduciary shall be deemed excluded from exercising such specified powers.

The consequence for a beneficiary is in subdivision 6. Unless the instrument says otherwise, an excluded fiduciary has no duty to monitor, review, inquire, investigate, recommend, evaluate, or warn about a directing party’s exercise or non-exercise of a granted power, and is not liable for following a direction except in cases of willful misconduct. It is also relieved of any duty to tell a beneficiary that it would have decided differently.

Who is on the hook depends on which hat. Under subdivision 5(a) an investment or distribution trust advisor is a fiduciary held to the same duties and standards as a trustee, and the instrument may vary that only as far as it could vary a trustee’s. Under subdivision 5(b) a trust protector is not a fiduciary unless the instrument says so — except that a protector holding an investment or distribution advisor’s powers is a fiduciary to the extent of those powers.

Where the word shows up

In the comparison between Minnesota and the trust-friendly states, where the structural features are usually assumed to live somewhere else. Minnesota has had this one since 2015, and rewrote it in 2025. That rewrite moved things: the trust protector’s own power to terminate the trust was struck and reappeared, changed in form, as a distribution trust advisor’s power to direct the trustee to terminate; subdivision 5(a) lost the clause that let a governing instrument opt an advisor out of fiduciary status; and a new subdivision 9a applies the trustee rules on acceptance, bond, cotrustees, compensation, resignation, removal and vacancy to a directing party.

The section also carries a notice provision worth knowing before a protector acts. Where a charity is a current beneficiary or a presumptive remainder beneficiary, a trust protector must give the attorney general’s charitable trust division at least 60 days’ notice before modifying beneficial interests, modifying a power of appointment, removing or appointing a trustee, an investment or distribution trust advisor, another directing party, or an investment or distribution committee member — including designating a plan of succession for future holders of any such office — or changing situs or governing law. The division may waive it.