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Considering a trust protector for a California estate plan?

On Behalf of | Jul 14, 2012 | Trust Administration |

The administration of a trust following the death of its creator is usually left to a trustee. However, many legal experts now advise appointing a trust protector as a supplement for a trustee, rather than a replacement.

The use of a trust protector is a relatively new concept in California and is beginning to circulate among estate planners.

The trustee is responsible the administration of an estate while a trust protector oversees the administration and has the ability to take action when needed to make sure the intention of the settlor is carried out.

Families with a moderate or sizeable number of assets often use revocable trusts in estate planning, which revert to irrevocable trusts once the settlor dies. Problems arise for trustees when irrevocable trusts do not reflect changes among beneficiaries, often caused by a settlor’s inattention to the trust before death.

A trustee may be following a trust’s instructions to the letter by distributing a large sum of money to an heir, but what if the heir is not qualified to handle it? Trustees cannot use their own discretion to change how a trust is administered. Trust protectors have more flexibility.

Trustees and beneficiaries have the option to ask a court to change the terms of an irrevocable trust. A trust protector, whose main duty is to fulfill the settlor’s wishes based on knowledge of any changes, may not need a court’s permission to act.

Trustees are bound to distribute assets among heirs as the irrevocable trust states. A trust that was created but ignored during the settlor’s lifetime may not take into consideration changes that end up limiting the trust’s effectiveness – a beneficiary’s continued worthiness to receive a large sum, an heir’s divorce or disability, a change in laws or some other significant event.

A trust protector can assess beneficiary needs and take actions, often without court approval. A protector can replace trustees or beneficiaries that fail to live up to the settlor’s standards.

In addition to the other named responsibilities, a trust protector may also become a watchdog for a trust as a fail-safe backup for a decedent who was lax in staying current with estate planning.

Ultimately, the decision to add a trust protector is a choice that could reduce court involvement in an estate.

Source: montereyherald.com, “Liza Horvath, Senior Advocate: Add a trust protector,” Liza Horvath, July 2, 2012