A recent New York Times article pointed out the importance of appointing a reliable, trustworthy trustee, someone you think you can confide in and who understands your intentions. But, even if you are confident in your choice of trustee, you might need a third party called a “trust protector” in case that trustee turns out to be less trustworthy than you thought, or dies, or even if estate laws change.
According to the article Guardians of Trusts, Florida attorney Daniel D. Mielnicki stated, “A trust protector is like a traffic cop who can write tickets.” Once a staple of offshore trusts, protectors have been gaining popularity in recent years for use in conventional domestic trusts, a reaction, Mr. Mielnicki said, “to the evolving complexity of trust law.”
The idea behind the Protector is to have somebody who can watch over the Trustee, and terminate the Trustee for any misconduct. Originally, that was the only power the Protector had: Fire the Trustee. Nothing more, nothing less. But as the drafting of offshore trusts evolved, the Protectors were sometimes given additional powers, such as to appoint the successor Trustee if one was fired.
Starting in the late 1990’s, states began to pass legislation that created advantages for traditional domestic trusts that were similar to those found in offshore trusts, which is how Protector provisions migrated into American usage. Today, many common types of trusts routinely have provisions for a Protector — which they should. To find out why,
or for more information about Trust Protectors, read these two insightful and detailed reports:
- Guardians of Trusts by John F. Wasik; New York Times, March 12, 2014
- Trust Protectors — What They Are And Why Probably Every Trust Should Have One by Jay Adkisson; Forbes.com, August 25, 2012