What type of trust has a protector

Such changes would normally be possible only through the courts. So, in essence, a trust protector is, in part, a substitute for a judge and a court. Trusts originated in the 12th century as a hybrid of English Common Law and the Court of Chancery, and were a direct result of the Crusades. Now, in old England, the Court of Chancery had the jurisdiction to rule on church-related matters, which included guardian estates and even land ownership.

The remedy? This means they could return the lands and property to the correct owner—despite the title documents and so on saying someone else owned them. This crucial split between legal title and equitable title is fairly unique to Anglo-American law, and not found, for example, on the European continent. Although Trust Protector language is included in Revocable Living Trusts in order to provide flexibility, the parameters regarding who can be named as a Trust Protector are actually pretty stringent.

As I mentioned earlier, a Trust Protector is almost always an attorney. You could name your friend Fred as your Trust Protector, but would Fred a have the time, b know what to do, c be alive and healthy when needed?

Would anyone be watching Fred to see that he did the right thing? Along with knowing what to do and having the professional time to do it, a licensed attorney, or actually an attorney appointed by a firm with longevity, will be bound by laws, ethics, and reputation to act as Trust Protector.

Importantly, the Trust Protector can monitor the activities of the Trustee—and note that the Trust Protector is given powers to accomplish this monitoring. This includes the power to remove and replace an offending Trustee for example, a Trustee who goes rogue and starts giving money to people not named in the Trust. That said, although the Trust Protector has the power to monitor the Trustee, they have no duty to do so, and cannot be held liable for failing to perform their monitoring.

Overall, the Trust Protector should accomplish tasks for the Grantor that the Grantor cannot do personally because of tax more on that later , other legal prohibitions, disability or death. Trust Protectors can limit the power of a Trustee, and support them at the same time, adding to the strength, as well as the flexibility of the trust.

What may trigger the intervention of a trust protector? If you are the Trustee or a Beneficiary of a Trust, you may well wonder if your Trust Protector will be constantly watching out for your interests, or suddenly stepping in to meddle. A Trust Protector is not omniscient, and will almost certainly not be checking in from time to time. Someone, such as a guardian, may for example know that a beneficiary who is disabled or has special needs will be moving to another state with very different laws and public benefits systems.

This guardian may ask the Trust Protector to amend the trust to take into account the new system. In a more common case, a trustee may realize that he or she can no longer serve, and appeal to the Trust Protector to name a new trustee, without going to court. Or the Trustee may see that important trust changes must be made to account for new tax laws.

A Trust Protector may be crucial not just to modify your trust after you pass away and ensure your wishes are carried out. A Trust Protector may be crucial to certain trusts you use during your own lifetime. For example, you may create an irrevocable trust to protect certain assets from creditors, from a divorce, or from lawsuits—as we discuss more fully in our article on Asset Protection.

But circumstances may well arrive when the Trustee of such a trust needs to be changed, or other terms modified, to prevent the seizure of those assets in a court proceeding. You need a good, savvy lawyer to construct asset protection trusts with appropriate powers for the Trust Protector. If the thought of incurring extra fees may keep you from considering a Trust Protector, consider this: Trust Protector compensation is not provided until the Trust Protector has to act, and Trust Protector fees must be reasonable, by law.

One commonly asked question is whether you can add a Trust Protector to a trust you already have. At our California Estate Planning firm, it is the default policy to recommend a Trust Protector clause in most trusts. We feel the potential benefits and safeguards are too important to ignore. Any trust can use a trust protector, but they are commonly used in irrevocable trusts. In most cases, the grantor gives their right to modify the terms of an irrevocable trust. If unforeseen events happen that require modification of the trust, the grantor will have a difficult time making any changes.

A trust protector can be valuable in these situations. They can be given the power to correct errors, amend or terminate the trust, or to remove or add trust beneficiaries. Because the trust protector is a third party not the trust grantor , the trust can still receive the legal treatment of an irrevocable trust.

Trusts that will last a long time may also benefit from appointing a trust protector to give the trust the flexibility to change over time if necessary. Trust protectors can be attorneys or entities designed specifically to serve as trust protectors. The important thing is that the trust protector is a neutral third party. The role of trust protector can be served by an individual, entity, or committee. Depending on the goal of the trust creator, having multiple people on a committee of varying areas of expertise may prove beneficial.

In addition, the trust may also name other individuals or entities to serve as successor trust protectors. The successors would not have any authority to serve unless the initial designated trust protector became unable or unwilling to serve.

Almost always, the trust protector is an attorney and more often the attorney that drafted the trust instrument. Trust protectors can play an important role in ensuring the longevity of a trust throughout many generations, during both legal and life changes.

Contact Us Today to get started. October 20, October 20, 0. What is a Trust Protector? What Does a Trust Protector Do? Trust Protector vs Trustee Most people are familiar with the role of a trustee in trust administration. The power granted to the trust protector may vary from trust to trust. Fiduciary or Non-Fiduciary Role If not explicitly stated in the trust instrument that the trust protector is a fiduciary, state trust law will determine fiduciary or non-fiduciary role of the trust protector.

Benefits of Using a Trust Protector Traditionally, many states limited the length of time a trust could exist. Types of Trusts that Benefit Most from Trust Protectors While virtually all trusts could benefit from a trust protector, complex and long-term trusts such as dynasty trusts and generation-skipping trusts benefit the most. Selecting a Trust Protector Important qualifications for a potential trust protector are training and experience in trust and tax law and tact in navigating family dynamics.