While they are still a relatively new concept in the United States, trust protectors have been used for many years when designing overseas trust documents. In effect, a protector was appointed to assist the trustee of an irrevocable trust to make changes when they were unable to but in addition, they are given broad discretion over the trust.
What Can a Trust Protector Do?
When you set up a trust, you have the right to appoint a trust protector to handle a broad range of duties. These may include (but are not limited to) replacing your successor trustee, changing the terms of the trust should the laws change and stopping the trustee from making certain investments with trust funds.
What Role Does the Trust Protector Have With Beneficiaries?
Regardless of how much we love our family members, we do not have looking glasses into the future. If one (or more) of your beneficiaries is wasting money at a rapid rate, has issues that may prevent them from managing their own funds or suddenly runs into significant financial problems the protector can ensure they are not abusing the funds you have left them.
What About The Role of Protector Versus Trustee?
No matter how carefully you select your trustee, your wishes may not be carried out appropriately. In fact, lawsuit, specifically Townsend v Townsend 171 Cal.App.4th 389 (2009) shows exactly what happens when a trustee has too much power. In this case, had there been a trust protector, the no contest clause would not have been an issue because the original surviving trustee would not have been allowed to materially change the original trust intentions.
Anyone who is considering a trust today may do well to consider appointing a protector for their trust. Your trust documents should explain their duties, what happens in the event they are unable to serve as protector and may also include a successor protector.
When you are ready to start your estate plan, call the Law Offices of James C. Shields for assistance. We can help you prepare all of the documents and help you determine how to integrate a protector into your trust.