When discussing estate plans with clients, they are usually familiar with the concept and duties of a Trustee. However, most clients, even those with existing estate plans, are not familiar with the concept of a Trust Protector, a position which may be equally as important.
A Trust Protector is an individual named in the trust, typically in a non-fiduciary capacity, with a power to act under a specifically enumerated list of powers that are not available to the Trustee. The specific powers available to the Trust Protector are predetermined by the grantor at the time the trust is drafted. They can be customized to ensure that the Trust Protector has enough power to act in the necessary scenarios while also ensuring that the Trust Protector does not have too much power over the trust agreement.
Specific powers commonly include the power to amend or modify certain provisions of the trust; the power to change the situs of the trust; and the power to remove and appoint a trustee. However, once the trust agreement is signed, the powers of the Trust Protector are locked, as the Trust Protector does not have the ability to expand his or her own powers (however, he or she may reduce his or her own powers).
The position of Trust Protector is extremely important within an irrevocable trust since irrevocable trusts are generally not amendable. If an irrevocable trust does not have a Trust Protector, the ability to make changes to the trust is limited and must meet certain requirements per statutes which may result in a time consuming and costly court proceeding.
Although, the position of Trust Protector is most commonly used in irrevocable trusts, we also highly recommend their use in revocable trusts; as such trusts will eventually become irrevocable upon the death of the grantor. If you have an existing revocable trust agreement which does not contain Trust Protector Provisions, it may be advisable to contact our office to include such position into your estate plan.