Trusts have been a powerful, yet evolving, estate planning tool for a long time. As trusts have changed, the need for extra protection and a way to modify trusts became apparent. Trust protectors, sometimes also known as Trust Advisors, may meet both needs. Just as it’s important to understand the type of trust that is appropriate for you, it’s also critical to make sure you have the right people working on it.
The typical trust consists of the following:
Trusts are established for different purposes with different terms. Others who have a role in the trust include trust advisors, trust directors, and directed trustees. Sometimes one person may serve in more than one role.
Occasionally, a trustee behaves in an untrustworthy way, possibly by:
While trusts may be protected by prevailing law, further protection is sometimes warranted.
The trust document that establishes the trust may name a specific trust protector. Alternatively, the terms may set out the procedures for the beneficiaries or a court to appoint a trust protector. A trust protector should not be related to the settlor, the other trustees, or the beneficiaries. In other words, the trust protector must be an independent third party.
A trust document often dictates the trust protector’s duties and responsibilities, which may be broad or strictly limited. Generally, the trust protector may be authorized to:
Whether you have a trust now or may consider establishing one, it’s important to know how to protect it.