The [Trust] Protector is so useful, and it has become so commonplace, that the concept should almost always be discussed between planners and those looking to form trusts.
In every trust arrangement there are three fundamental parties: the settlor, the trustee, and the beneficiary. Increasingly, however, another party (or role) is being added to the mix.
Enter the “trust protector.”
So, what is a trust protector and ought you to consider one?
Even if you are considering a simple trust arrangement, it is worth reading a recent Forbes article titled “Trust Protectors — What They Are And Why Probably Every Trust Should Have One.” The article offers a compelling case for the inclusion of trust protectors specifically, but offers a great deal of information – and diagrams – about trust arrangements in general.
Even if you already are savvy on trusts, why would you want to consider adding another role and another hand in the process? While there are many reasons, one constant is the perennial problem of the untrustworthy trustee. Should that ever happen, then a trust protector is made to order.
In practical terms, the trust protector is an individual (or even a team of individuals) who assumes little in the way of day-to-day administration of the trust, but does assume higher powers over the trustee who does perform such functions. Result? The trust protector can fire the trustee, if they get out of line.
It can be comforting to know that, even if you have passed on, the trust protector can continue to serve as a “guardian angel” of sorts over your trust assets and protect your beneficiaries.
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Reference: Forbes (August 25, 2012) “Trust Protectors — What They Are And Why Probably Every Trust Should Have One”