What is a Trust Protector & When Might I Need One?
Ever hear people talking about their “trusts” and have no idea what they’re talking about? Well, a trust, simply put, is a legal vehicle that allows another party, a trustee, to distribute, hold, and/or control assets in a trust fund on behalf of a beneficiary. A trust helps give you options when it comes to managing your assets, whether you’re trying to protect your wealth and assets from taxes or pass it on to your children or loved ones after you pass away. There are various types of trusts and the concept of trusts have grown throughout the years. A Trust protector is a relatively new role in the trust industry. According to the American Bar Association, Trust Protectors provide an oversight of certain decisions. Just like the name states, a Trust Protector “protects”, watches over a Trustee and has the capability of terminating a Trustee, if necessary.
What is a Trust Protector?
Unlike a Trustee, Trust Protectors are not required by law but are a great option in trusts. Most clients who create a trust are familiar with the concept of a Trustee. All trusts require a Trustee be appointed to manage the assets of the trust. Trust Protectors are granted a separate and more narrow authority in relation to the trust. There are no laws requiring Trust Protectors to have any particular obligations—rather the Trust Protector’s power is limited to what is expressly stated in the trust agreement.
When Might you Need a Trust Protector?
Designating a Trust Protector will provide oversight of decisions that are not easily accommodated to other parties of a trust such as a Trustee. Designating a Trust protector is advisable if you wish for your trust to be flexible and long-term. Because Trustees are given a broad array of power over assets in a trust, there are situations where a Trustee may act dishonestly most commonly due to greed. A Trust Protector could be given the power to step in a situation and oversee the Trustee’s decisions. Moreover, a Trust Protector can review the accountings and make sure everything is done properly.
How is a Trust Protector Designated?
When creating your trust agreement, you can identify an individual or entity you wish to serve as the Trust Protector. The designation of the Trust Protector should also address what authority the Trust Protector will receive. Some powers a Trust Protector may be given include:
- Requesting the removal and replacing the trustee;
- Allowing the trust be amended to comply with changes in the law;
- Resolving disputes between Trustees in cases where there are more than one;
- Overseeing the trust administration;
- Reviewing the annual accounting.
When designating a Trust Protector, be specific with what authority you are giving the Trust Protector. The more specific you are, the more likely it will be that your trust will be carried out according to your goals.
You may designate anyone to be a Trust Protector; but it is a good idea to choose a third-party who is not a beneficiary to the trust and who is not a family member. For example, you may designate your attorney or accountant as your Trust Protector.
The Florida Probate & Family Law Firm has a team of experienced Probate and Family attorneys located in Coral Gables, Florida. As attorneys who have extensive knowledge in Probate, we understand it can be a time-consuming and complicated process. If you currently have questions regarding a probate issue, contact us to set up an appointment to evaluate your options. We serve the entire state of Florida so call us at 305-677-5119 or email us at firstname.lastname@example.org.