- The Trust Protector, A Newcomer to the Trust Scene
- January 12, 2018
Trusts have been recognized in American law for hundreds of years. Therefore, the roles of parties involved have long been well-defined. In recent years, however, a newcomer has arrived on the trust scene: the trust protector.
A trust is a property arrangement in which one person (the trustee) legally owns property, but holds that property solely for the benefit of one or more other persons (the beneficiaries). Therefore, as long as trusts have been around, there have also been trustees and beneficiaries. In nearly all situations, the trust is established by a written agreement describing the powers and obligations of the trustee and how the beneficiary will receive benefits from the trust's assets.
While trustees and beneficiaries have been around a long time, the trust protector or trust advisor has appeared only in recent years. In fact, only since 2013 has Tennessee recognized the trust protector or advisor by statute.
The role of a trust protector is to bring flexibility to a trust. While trustees are often given discretion as to making distributions to beneficiaries, they are not usually given any power to change the terms of the trust. The trust protector, on the other hand, is usually given limited authority to modify the terms of the trust or even end the trust. In addition to that important authority, there are at least 20 lesser powers and authorities that can be given to a trust protector. These powers allow changes to the trust in response to changes in law or in beneficiary circumstances.
What to DoProvisions including a trust protector can be made part of any trust at the time of drafting. For an existing revocable trust, an amendment to the trust can add a trust protector. For an existing irrevocable trust, it is usually possible to add a trust protector, either by agreement of the trustee and beneficiaries or by court approval, depending upon the circumstances. The desirability of having a trust protector is directly related to the size of a trust or the length of time a trust will exist. For example, trusts that are of significant value or intended to last a very long time will benefit from the flexibility of having a trust protector. Trusts that are small in size or intended to exist for a relatively short time don't typically need a trust protector.