What is a trust protector? Traditionally, the three roles that must be filled when setting up a trust are the settlor (also called a grantor, trustor, or trustmaker), the trustee, and the beneficiary. All three roles are necessary to create a trust that functions properly. But a fourth optional role is the trust protector, who ensures that your intentions for creating the trust are fulfilled despite changing law or circumstances.
Based on your wishes, the purposes of the trust, and applicable laws, the trust protector can hold many different powers, including administrative powers traditionally held by a trustee, such as the power to make distributions, and judicial powers traditionally held by a court, such as the power to remove beneficiaries.
Here are three of the main reasons to consider including a trust protector in your trust-based estate plan:
- • Trust protectors offer increased flexibility and peace of mind. No one knows what the future may hold, so including trust protector provisions in your trust agreement can ensure that your trust achieves your goals despite changing circumstances and laws.
- • Trust protectors can provide additional oversight and support for a trustee. A trust protector can ensure that a trustee is properly administering the trust and carrying out the trust’s purposes. If the trustee is delinquent in its duties, a trust protector may remove the trustee and appoint a better-suited trustee.
- • Trust protectors provide an easier and less costly means of modifying a trust. If a trust needs to be modified after the settlor’s death, such as if there is a tax law change that negatively affects the beneficiaries, usually the only route is through the court system, which is a complicated and costly process. Giving a trust protector the power to modify the terms of a trust can prevent the need to go to court to modify the trust.
Please contact us to learn more about naming a trust protector and discuss whether it is a good idea for you. We are happy to answer any questions you may have and help you craft an estate plan that is perfect for you and for your loved ones.