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In Delaware, a grantor can retain or give to the trustee as much or as little control over investments as he or she desires.

In Delaware, a trust grantor has greater investment flexibility than he or she would in other states because Delaware law permits grantors to establish their own investment parameters.1

This flexibility gives a grantor in Delaware the power to authorize aggressive investments, provided, of course, that the entire portfolio, when viewed collectively, is appropriate for the trust.2

Realizing that trustors may wish to use non-Delaware investment managers, Delaware law recognizes that duties performed by an investment manager differ from those performed by a trustee responsible for administrative duties. By statute, a Delaware Trust can give an investment advisor or manager the power to control trust investments while relieving the trustee of responsibility for either the choice of the advisor or the advisor’s investment results. The advisor or manager would alone be liable for its decisions.3 In many states, a trustee cannot avoid this responsibility no matter what the trust agreement says, and is therefore unwilling to accept a trust unless he or she can manage its investments.

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Footnotes

  1. 12 Del.C. §3302(d); 3303.
  2. 12 Del.C. §3302(c) states that the propriety of an investment decision is to be determined by what the fiduciary knew or should have known at the time of the decision about the inherent nature and expected performance of the investment, the attributes of the portfolio, the general economy, and the needs and objectives of the beneficiaries.
  3. 12 Del.C. §3313. For example, a direction advisor to a Delaware Trust would have the same fiduciary duties regarding investments as the trustee itself.