A trust protector is an independent person or institution with authority over certain aspects of a trust. The main role is making sure the wishes of the person who established the trust (the settlor or trust maker) are carried out.
The trust document used to set up the trust should state the trust protector’s responsibilities. Some trusts state the name of the trust protector. Others simply give someone the authority to choose a trust protector.
Generally, a trust protector cannot be a trust beneficiary. In fact, the trust protector cannot even be related to the settlor, the trustees, or the beneficiaries.
Some Representative Duties
Trust protectors may have some or all of the powers on this list:
- Modifying the trust because of changes to the Internal Revenue Codes, federal or state laws, and any rulings or regulations based on those changes.
- Adjust a beneficiary’s interest in the trust.
- Removing trustees, trust advisors, directing parties, investment committee members, or distribution committee members.
- Terminate the trust, if necessary.
- Change the legal jurisdiction of the trust.
- Choose successor trust protectors.
- Settling disputes that arise over the trust.
Using a Trust Protector
Revocable Living Trusts may use trust protectors but we find that few attorneys offer that alternative to clients. It is a wonderful feature to include for your loved ones as it provides them recourse with regard to modifications to the trust, or operations of the trust, after you pass away and the revocable trust becomes irrevocable.
Irrevocable trusts often use trust protectors. It is impossible or at least very difficult to change the terms of an irrevocable trust. Sometimes the terms of an irrevocable trust need to be altered, however. For example, the trust may no longer serve the purpose intended by the trust maker. A trustee may no longer be trustworthy. Another example is if the trust becomes adversely affected by the economy.
Dynasty trusts may live on for generations. Sometimes the terms of a dynasty trust don’t work as people and laws change. Having a trust protector – or at least the ability to name a trust protector – may make a big difference in how the trust operates as years go by.
Trust Protectors May Not Work for Every Trust.
Just as not everyone needs a trust, not every trust needs a trust protector. Consult with an attorney before establishing any trust. Choosing the wrong trust could have serious consequences for your beneficiaries.
At Virtus Law, we have the experience to address your concerns. To schedule an appointment with one of our estate planning attorneys, contact us at 612.888.1000 or send an email to email@example.com. Our main office is in Minneapolis, with other offices located in Maplewood, Cambridge, Edina, Mendota Heights, and Red Wing.