A trust protector is usually a person, but can be an entity, a grantor appoints to supervise and safeguard the interests of the grantor or grantors. They serve as a watchdog over the trustee and are aware of the trust terms. The protector usually has the authority to oversee the process of the trustee and their management of the trust assets.
A trust protector’s role can vary depending on the trust’s terms and the grantor’s wishes. The protector typically has the authority to make decisions such as modifying the trust’s terms or removing the trustee, if necessary. They can also help resolve disputes between the beneficiaries and/or the trustee. Trust protectors can be appointed in several ways. They may be named in the trust agreement itself, or they may be appointed later by the trustee or a court. In some cases, the trust protector may be a professional, such as an attorney or accountant, who is better equipped to handle complex legal or financial issues, but many times it is a family member.
One primary benefit of having a trust protector is that they provide an extra layer of oversight and protection for the beneficiaries. They can help ensure that the trustee is acting in the best interests of the beneficiaries and not engaging in any self-dealing or other misconduct.
Another benefit of having a trust protector is that they can help the trust adapt to changing circumstances. For example, if the trust’s original purpose is no longer feasible or desirable, the trust protector may have the authority to modify the trust’s terms to better reflect the current needs and goals of the beneficiaries.
However, where your trust protector resides – matters. A trust protector can be a fiduciary of a trust. Some states will apply their tax code to a Nevada estate if a “fiduciary” lives in their state. The downside of a trust protector is that they usually have the authority to change your trust after your death, which may not align with your interests. Moreover, it causes the grantor to pay attention to one more aspect of their estate plan, which can be cumbersome. If the protector moves from Nevada to California, and the grantor does not know this or doesn’t think to change their trust, California may apply its tax code to the Nevada trust estate.
To determine if this is right for you, please schedule a consult with a Surratt Law attorney to discuss your
estate and how best to address your desires.
by Travis Clark, Esq.