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What is a trust protector?

On Behalf of | May 30, 2018 | Trust Administration |

The role of a trust protector is basically what the term states — to protect the trust. Trust protectors became popular in the 1990s as offshore trusts boomed. However, now it’s considered wise for just about anyone who sets up a trust to have one.

For example, say you set up a living trust for which you’re the trustee for as long as you’re alive. Upon your death, the person you’ve appointed to be the successor trustee takes over the role. That person administers the trust and dispenses the assets as you’ve designated.

Of course, you’ve given considerable thought to your choice of a successor trustee and selected someone who’s reliable and honest. However, what happens if that person goes off the rails. Maybe he or she has developed a substance abuse problem that impacts decision-making. Maybe your successor trustee has had a falling out with one of your heirs and doesn’t want that person to inherit anything? Perhaps he or she is in extremely poor health and is unable to carry out the responsibilities of the job.

A trust protector can remove that person as trustee and (if you’ve given the protector the authority) appoint a new one. However, you have to be careful with your choice of trust protector. You don’t want someone who could end up working with the trustee to loot the trust. Just as you can appoint a corporate trustee, you can also choose a corporate trust protector.

When you are working with your California estate planning attorney to draft your living trust and other estate planning documents, it’s worthwhile to discuss having a trust protector and what responsibilities you want to give that person or entity. Your main priority is to do everything possible to ensure that your wishes are carried out as you’ve designated after you’re gone.

Source: Forbes, “Trust Protectors — What They Are And Why Probably Every Trust Should Have One,” Jay Adkisson, accessed May 30, 2018

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