What is a trust protector?

A trust protector is an individual or entity appointed in a trust document with specific powers to oversee the administration of the trust and ensure its purpose is fulfilled. They act as a safeguard, bridging the gap between the trustee and the beneficiaries. Their role is not to manage the trust's assets directly, but rather to monitor the trustee's performance and, if necessary, intervene to protect the interests of the beneficiaries and the original intent of the grantor (the person who created the trust).

Key aspects of a trust protector include:

• Appointment and Removal: The trust document itself dictates how a trust%20protector is appointed, their term, and the process for removing them. Often, successor protectors are named to ensure continuity.

• Powers and Duties: The specific powers of a trust protector are outlined in the trust agreement. Common powers include:

  • Removing and appointing trustees.
  • Modifying the trust%20terms to adapt to changing circumstances (e.g., tax laws, beneficiary needs).
  • Interpreting ambiguous provisions in the trust document.
  • Changing the trust's situs (location).
  • Adding or removing beneficiaries.
  • Addressing disputes between the trustee and the beneficiaries.

• Fiduciary Duty: Whether a trust protector owes a fiduciary%20duty to the beneficiaries depends on the jurisdiction and the specific terms of the trust. In some cases, their duty is solely to act in good faith. Regardless, they should exercise their powers responsibly and with due consideration for the beneficiaries' interests.

• Benefits of Having a Trust Protector:

  • Flexibility: Allows the trust to adapt to unforeseen circumstances.
  • Oversight: Provides an extra layer of protection for the beneficiaries.
  • Continuity: Helps ensure the trust's long-term viability.
  • Dispute Resolution: Can facilitate communication and resolve conflicts between the trustee and beneficiaries.

• Potential Drawbacks:

  • Cost: A trust protector may require compensation for their services.
  • Complexity: Adds another layer of administration to the trust.
  • Liability: Potential for disputes if the trust protector's actions are challenged.

The role of a trust protector is particularly valuable in long-term trusts, trusts with complex assets, and trusts designed to provide for beneficiaries with special needs.