At a basic level, trusts have three roles. The settlor, or trust creator, dictates the terms of the trust and places assets in the trust. The beneficiaries are the people for whose benefit the trust was created. The trustee then manages the trust assets for the benefit of the beneficiaries in accordance with the terms of the trust.
One optional trust role is the trust protector. A trust protector can have any number of duties, but fundamentally a trust protector supervises the trustee and ensures the trustee’s duties are performed efficiently and effectively.
The trust document sets out who will serve as a trust protector and what duties and powers the trust protector can perform. Some, but not all, powers that a trust protector may have include the ability to review trust assets, request an accounting of trust expenses, direct trust distributions, change trust investments, change trustees, appoint a successor trust protector, and even amend the terms of the trust as tax and state laws change.
A trust protector can be particularly helpful for special needs trusts that have a non-family member as trustee. Often times a parent, or other family member, serves as trustee of a special needs trust to compassionately administer the trust for the benefit of the beneficiary. However, there may come a time when the parents cannot serve and other family members may be too busy, unwilling, or ill-equipped to serve as trustee. In this case, the trust may have an independent, professional trustee. The family member, or trusted family friend, who was unable to fill the role of trustee could serve in the less demanding role of trust protector to supervise and periodically review the independent trustee’s actions.
The use of a trust protector, however, requires careful drafting of the trust document by an experienced attorney with a specific client’s needs in mind. The trust document should ensure that the trust protector’s powers are broad enough to ensure the efficient running of the trust, but also precisely defined to avoid unnecessary conflicts and make sure the trust fulfills its intended purpose while conforming to all relevant laws and regulations.
To determine if a trust protector would be appropriate for your trust, please call Martha C. Brown & Associates at (314) 962-0186.