What Is a Trust Protector
If your estate plan includes a trust, you may have concerns about protecting the integrity of the trust if unexpected changes occur or legal challenges arise at a later date. In that situation, you may wish to consider the option of designating a trust protector to provide an extra layer of protection for future operation of your trust. Your estate planning attorney can help you understand the role of a trust protector and decide whether you may benefit from designating one for your trust.
How a Trust Works
To understand the role of a trust protector, it is important to know how a trust works as part of an estate plan. A trust is a special type of legal arrangement established by a detailed, complex legal document. In the trust document, the grantor or settlor (person creating the trust) designates a trustee to manage, administer, and distribute trust property to the beneficiary (or beneficiaries) named in the document. The trust instrument also details the terms for the trustee’s management and distribution of the trust assets.
Creating a trust requires assistance from a knowledgeable trust lawyer. Your attorney drafts the trust document to conform with all your wishes and establish all the necessary terms for operation of the trust to accomplish your goals. After you execute the trust document, you also need to fund the trust for it to become effective and operational.
Role of a Trust Protector
Designation of a trust protector is not required for a trust to be valid and operational. For some trusts, there is no need to appoint a trust protector. But if the grantor is concerned about the future integrity and operation of the trust, particularly if the trust will last over a long term, designating a trust protector is an option to consider.
A trust protector is a trusted neutral third party separate from the trustee, who has different responsibilities from those of the trustee. A trust protector is appointed in the trust document and assigned to perform specific listed fiduciary duties specified in the document. Powers of a trust protector may cover a broad range of responsibilities intended to ensure smooth operation and administration of the trust and fulfillment of the grantor’s intentions and spirit of the trust, as well as address issues or disputes that may arise in the future.
Duties and authority granted to a trust protector may include:
- Ability to make amendments or modifications to the trust
- Power to choose, remove, or appoint trustees
- Authority to approve or consent to major trustee decisions
- Power to resolve or mediate disputes, including disagreements between trustees and beneficiaries
Specific reasons for designating a trust protector may include:
- Authorizing a trust protector to make necessary modifications to accommodate changes in family structure, asset composition, and applicable laws
- Ensuring operation in compliance with the grantor’s intentions for a long-term trust that will span future generations
- Protecting assets and inheritances from outside parties, such as creditors
- Making changes necessary to minimize taxes
- Providing expertise for special types of assets in a trust
- Limiting the authority of the trustee with regard to discretionary distributions to beneficiaries
- Maintaining the privacy of the trust operations
Having a trust protector may guard against mismanagement, enable adaptation to change, prevent conflicts, and even provide a means for resolving disputes to maintain the integrity of the trust. Some trusts may benefit from having a trust protector, while other trusts do not need a trust protector. Whether designating a trust protector is a suitable option for your circumstances is an issue to discuss with your estate planning lawyer.
Designating a Trust Protector
If the circumstances of your trust create concerns that may be addressed by designating a trust protector, you should discuss those concerns and the option of appointing a trust protector with your estate planning attorney. You may have those discussions when you are setting up your estate plan and trust, or you may talk about a trust protector after you already have a trust.
To designate a trust protector, the appointment and powers of the protector must be included in the trust document. That can be accomplished when the trust is initially created, or it can be accomplished by amending the trust at a later date. In either case, your attorney should draft the designation and authority provisions in the trust document. Creating or amending a trust is not a task you should try to accomplish without assistance from your estate planning lawyer.
Talk With an Experienced Georgia Trust Attorney
Our Cartersville estate planning practice at Asset Protection & Elder Law of Georgia focuses on helping clients identify and accomplish their estate planning goals by determining the right approach for their personal and financial circumstances. If your estate plan includes a trust, we can help you determine whether a trust protector would be beneficial and write the necessary provisions into your trust document to designate a trust protector and define the trust protector’s authority.
We serve clients throughout the communities northwest of Atlanta, including in Bartow County, Cobb County, Cherokee County, Gordon County, Floyd County and Paulding County. To schedule a consultation, call us at (770) 382-0984 or contact us through our online form.
