Posted by: The Life and Legacy Planning Group
Trust Protectors are a fairly new tool, but one that is increasingly common in estate plans drafted in the United States. Trust Protectors have been in common use in off-shore and international trusts for years. In short, Trust Protector is a position in a trust that can add flexibility and some measure of control over an otherwise irrevocable document. Trust Protectors can ensure that the integrity of trusts is maintained, that trustees make solid distribution and investment decisions, and that the trust can react to changes in law and circumstance.
Whenever changes occur, as they are bound to do, the Trust Protector can be given the power modify the trust to carry out the intent of the trust’s creator. Significantly, the Trust Protector has the power to act without going to court – a key benefit which saves time and money and honors family privacy.
Here are 6 Key Ways a Trust Protector Can Help You
A trust can be drafted to give any one or more of the following powers to a Trust Protector:
- Remove or replace a difficult trustee or one who is no longer able or willing to serve;
- Amend the trust to reflect changes in the law;
- Resolve conflicts between beneficiaries and trustee(s) or between multiple trustees;
- Modify distributions from the trust because of changes in beneficiaries’ lives such as premature death, divorce, drug addiction, disability, or lawsuit;
- Allow new beneficiaries to be added when new descendants are born; and
- Veto investment decisions which might be unwise.
The key to making a Trust Protector work for you is to be very specific about the powers available to the Trust Protector. It is important to authorize the Trust Protector to fulfill his or her duty to carry out the intent of the person who created the trust – not the intent of the Trust Protector.
Can You Benefit from a Trust Protector?
Generally speaking, the answer is yes. Trust protector provisions provide flexibility and an extra layer of protection to assure that the intent of the creator of the trust is honored and that trust assets and trust beneficiaries are protected. Trust Protector provisions can be incorporated into a new trust and older trusts can be amended or, in the case of irrevocable trusts, may be reformed to include trust protector provisions. If you have trusts you’ve created or are the beneficiary of a trust that feels outdated, call our office now.