What does a trust protector do?
If you’re ready to put an estate plan in place, you’re likely doing a little online research. You’re probably encountering all sorts of terms with which you’re only vaguely familiar or may have never heard before.
One term you may never have heard is “trust protector.” That’s a person or entity not related to the person making the trust (“trustmaker”) or to any trustees or beneficiaries whose job it is to ensure that the trust is carried out as intended. The specific responsibilities and authority of a trust protector will generally be detailed in the trust agreement.
The trustmaker may specifically appoint a person or entity or simply detail the procedure for appointing a trust protector if necessary. For example, a trustmaker may designate that his or her spouse has the authority to appoint a trust protector. If a trust agreement doesn’t have any language about a trust protector, one can be nominated by the beneficiaries or appointed by a court.
Laws regarding trust protectors vary by state. In Arizona, trust protectors cam be granted powers such as:
- Appointing or removing a trustee
- Changing the interests of a beneficiary
- Modifying the trust to improve its tax status or to keep it compliant with the law
Trust protectors are particularly important for “dynasty trusts” that are intended to continue for generations, as well as for family trusts, where multiple generations are involved in managing assets and ensuring the trust’s longevity. They are also used for irrevocable living trusts where the trustmaker has no control over the trust.
Source: The Balance, “Learn About the Role of a Trust Protector,” Julie Garber, accessed May 23, 2018