The advantages of using a trust protector
When establishing a revocable trust, it is advisable to designate a trust protector to supervise the administration of the trust upon your death. If there is more than one trustee, there is the potential for disputes among them. A trust protector, sometimes referred to as the “special co-trustee provision,” can also help decipher the trust in the event there are conflicts between the trustee and beneficiaries. For instance, if you are afflicted with a disability, the trustee will be responsible for handling your affairs for your benefit.
Upon your death, the trustee assumes the role of distributing your assets in accordance with your instructions. If a beneficiary objects to the way in which your trustee is managing the trust, a third party, such as a trust protector, can take into account the opinion of the trustee and beneficiaries, and decide whose opinion is most compatible with the goals and intent of the trust.
The trust protector is someone you select to make decisions concerning the trust after you can no longer make such decisions. In most cases, the trust protector is not required to assume any role with respect to the trust. The trust protector only has to take a position when the trust needs to be clarified.
The degree of authority granted to the trust protector is entirely within your discretion. You can restrict the powers of the trust protector to specific areas, including the resolution of conflicts between trustees and beneficiaries. You also have the option to expand the powers of the trust protector to include the capacity to make amendments to the trust in cases where there has been a change in legislation or another situation change since the trust was created, which would cause the trust to be in conflict with its intent.
Under trust law, it is usually expected that the trust beneficiaries will make certain that the terms of the trust are carried out for their benefit. However, it is useful to have a trust protector in cases where the trustee is located far away from the beneficiary, in which case it is unreasonable to expect the beneficiaries to oversee the administration of the trust by the trustee. In addition, where there is a special needs trust, and the beneficiary is mentally incapacitated or developmentally disabled, a trust protector can check on the actions of the trustee.
Among the powers of the trust protector are:
- Remove a trustee and choose a replacement;
- Appoint a successor trust protector if the current trust protector is no longer able or willing to serve;
- Designate members of an advisory committee to intercede in disagreements between the trustee and beneficiary, and limit administrative expenses;
- Modify distributions on the basis of changes in the lives of beneficiaries;
- Permit the addition of beneficiaries if there are more descendants;
- Deny investment decisions
The trust protector also possesses certain rights, including the right to receive all accounts, reports and notices that are sent to the beneficiary, and the right to ask for more information. Usually, the trust protector receives compensation, which can also be clearly stated in the trust.