Comprehensive estate planning is a long-term process. It is not complete simply because the many pieces of your estate plan have been considered and put into place. Your estate plan must be reviewed periodically, and with so much at stake it must also be protected. In addition to taking important basic precautions to protect your estate plan, you may also benefit from an additional form of protection by enlisting a trust protector.
What is a trust protector?
For estate plans that have a trust in place, and especially for those with several different trusts in place, it is important to ensure that trusts are administered in a legal way that meets your goals for establishing the trust. When you establish a trust, you must also designate a trustee. Trustees are entrusted with administering a trust according to the terms of the trust and the goals you have established for that trust.
But how can you make sure your trustee complies with your actions? The role of a trust protector is to oversee the trustee’s actions in administering a trust to ensure that those actions comply with the law as well as your wishes and directives for the trust in question. This can be an effective way of ensuring the viability of your trust because trusts that do not comply with strict guidelines run the risk of running afoul of the law, which can invalidate the trust and potentially drain important assets from the trust.
What can a trust protector do?
Ultimately, the powers that a trust protector retains are up to you and the powers that you delegate to that person or entity. While the trustee will still have the ability to administer the trust, a trust protector will oversee many important decisions that a trustee makes. In this way, you can help ensure that a trustee is doing what you have appointed them to do.
Depending on the powers you grant a trust protector, he or she may take an active role in the investment activities of your trust. They may amend terms within a trust when possible and necessary. They can work as an intermediary to resolve disputes between trustees and beneficiaries. A trust protector may even have the power to remove a trustee should the need to do so arise.
Is a trust protector right for you?
Trust protectors do add an extra layer of security in trust administration. However, providing them with too much power may eventually hinder the trustee’s actions and prevent valuable gains on assets within the trust. In short, delegating power to both a trustee and a trust protector is a balancing act that often depends on the specifics of your objectives.
Not every trust will benefit from a trust protector. An experienced estate planning attorney can work with you to determine whether a trust protector is right for your estate plan. He or she will also be able to work with you to ensure that a trust is established or amended in a way that makes clear the powers you wish to delegate to the trust protector should you find that appointing one may be beneficial to your comprehensive estate plan.