Setting up a (Revocable) Living Trust, can I put guardrails on / guidance to the successor trustee as to how the money is invested or where? I know getting overly specific in these types of documents is discouraged, but I am still curious as some of my successor list would be more financially savvy than others. I also know having these restrictions might also limit me while living. Things like;
No crypto
Only low cost online brokers
Only ETFs
70/30 portfolio
Multi factor index based approach
I’m not saying I’d do all that, those are just examples.
Typically, when the trustor dies the living trust distributes assets as described in the trust and the trust dies. There are exceptions, such as when a minor child receives a distribution. If the trust remains alive by not distributing all trust assets, then the trust will need to obtain a tax number and file trust tax returns. Trust tax rates can be hefty. You need to check your state laws for all of these, as laws vary. The more you want, the higher the cost of trust preparation.
Your attorney should be able to set that up, if that’s what you want. That shouldn’t limit you while alive, because you could modify the trust or revoke it altogether. Though perhaps if you ignore some of the rules, your successor could argue that those rules had been revoked. I have no idea if that would be successful or not. Your attorney should be able to tell you.
You shouldn’t have any problems setting guidelines for your trustee. That is a major reason people use trusts, to make sure their wishes are executed faithfully.
That being said, I’d be careful what you instruct the trustee to do. You my be asking for something that, in the future, cannot be done, like specifying a particular investment be made when that investment no longer exists after you have departed.
Dynasty trusts are neither good nor bad in themselves, but I am generally opposed to people with assets attempting to control what is done with those assets long after they die. I can understand setting up plans to help your children, and maybe your grandchildren, but personally think that should be the limit. If my estate was 9 or 10 figures, I might think differently. But I think future generations need to figure out what to do with their lives and not rely on great-great grandpa’s wealth to maintain their wealth and status.
We have no children and are leaving our estate to our donor advised fund, which will then distribute the funds as we have directed.