What is a Trust Protector? And when do I need one?
In essence, a trust protector is a substitute for a judge and a court. Instead of your family having to go through a legal battle to modify a trust after it becomes irrevocable, your trust protector can efficiently make changes to your trust to ensure your intentions are fulfilled without needing to go through the public court system.
But trust protector can go even further then that. If authorized by the terms of the trust (and allowed under state law), a trust protector can create “new instructions” for the trustee to follow. This makes them an extremely powerful resource for clients who value having a highly adaptable trust.
For this reason, many attorneys (and clients) consider trust protectors as a sort of superhero benefit to add to your trust.
To be clear, there are generally still limitations on the trust protector - for example, who can serve as a the trust protector, what is the scope of powers allowed by the trust protector (even if a state allows broad powers, you’ll want to provide specifics in your trust document), and who has the ability to appoint or remove a trust protector.
So who needs a trust protector?
Generally, anyone who has a continuing trust, meaning a trust the is expected to continue operating for the benefit of their children long after they (the grantor / trustmaker) is gone, should consider adding trust protector provisions to their trust.
This can generally allow the trust protector to modify the trust for a variety of issues that may come up in the future, such as:
modifying tax language in the trust to ensure the best tax outcome for your family
Modifying distribution language to ensure optimal asset protection for your beneficiaries (e.g., divorce, lawsuits, bankruptcy, or potential loss of government benefits)
The ability to change the governing law / trust situs to more flexible states if/when needed (since state laws change over time, we want to be able to make sure your trust is able to move with those changes when appropriate)
Correct mistakes, arbitrate disputes, appoint and/or direct trustees to align with your intentions while still keeping the trust document private and outside of the public court’s oversight
If you have additional questions about trust protectors, or would like me to review or create a trust for you, then click the link below to schedule a call with me today.
