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What is A Trust Protector and When Do I Need One?

What Is A Trust Protector and Why You Might Need One ?
By: David M. Frees III Esq.

There is a new sheriff in town and the sheriff’s name is the “Trust Protector.” By naming a trust protector, you can select a person, in advance, who can make hard decisions, change the terms of the trust (within certain preset limits and for certain purposes), and who can hire and fire trustees.

The job of the trust protector varies significantly depending on the nature and purpose of the trust. However, there are certain jobs that you may not want to assign to a trustee or a beneficiary and they can instead be assigned to a specific person named as the protector.

For example, it may not be desirable for a child (even an adult child) to be able to fire and replace trustees. However, if a trustee is not performing, it may be important for them to be discharged and replaced without the need and expense of court petitions. So what can you do? If you plan in advance, in steps the trust protector who can make these decisions.

In many cases, you can draft a trust to create the role of trust protector and then give that person the right to review financial transactions, to discharge and replace trustees, to resolve disputes, and more.
This can save money, protect your beneficiaries, limit court intervention, and make sure that the assets are not taxed again in a child’s estate because he or she had too much power over the trust. Trust protectors can also make sure that a corporate trustee’s fees are reasonable and their performance is effective.

For more information on trust protectors and specifically:

How, when and why to create a trust protector,
Who should act as a trust protector, (often lawyers, CPAs and other independent and trusted advisers)
The pros and cons of a trust protector, and
Why the trust protector is more important than ever in a changing tax environment,

please come back to this blog or sign up for our RSS feed to be automatically notified when we publish new articles on this topic.

And, for more information on trusts and trust planning please click here to order our Enhanced Estate Planning workbook.

David M. Frees III

For a complimentary consultation please call 610-933-8069 and mention PAESTAEPLANNERS for your free estate planning materials and resources.

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