In the process of estate planning you may assign a few loved ones to be your trustees and beneficiaries. However, if those people ever disagree on anything it might be useful to have a trust protector provision. Your trust protector will be the decision maker in that case. Read more about this role in this article:
Most people know that revocable trusts allow you to plan ahead of time, so upon your death your property may be distributed as you want. This is preferred to using a will that must go through the probate process which is overseen by a judge. However, I often get the question, “If there is no court involvement, who oversees the administration of my trust upon my death?” I respond by reminding them that “Trust” is the key term; hence they need to have total confidence in the individuals they are naming to handle their affairs. However, it is possible that two (or three or four) well meaning, honest individuals can have a different opinion about how to interpret and execute the instructions you leave. For this reason, it is also a good idea to have a trust protector provision in the trust.
The trust protector provision (sometimes referred to as the “special co-trustee provision”) allows you to name someone to interpret the trust in case of disagreements between trustees (managers of the trust) and beneficiaries (those who will receive the benefit of the planning). For example, if you become disabled, the trustee will be in charge of managing your affairs for your benefit. When you die, the trustee will take the role of distributing your assets as you have directed. If a beneficiary disagrees with how your trustee is managing the trust, it is useful to have a neutral person designated to consider the position of the trustee and the beneficiary and determine whose position is consistent with the purpose and intent of the trust.
In other words, a trust protector is someone the trust creator (you) chooses to make decisions regarding the trust, after you are no longer able to make those decisions. In a vast majority of the cases, the trust protector does not need to play any role in the trust. It is only when the intent of the trust needs to be more clearly defined that the trust protector may be called upon to act.
The amount of authority given to the trust protector is up to you. You may limit the trust protector’s powers to only certain areas, such as resolving disputes between trustees and beneficiaries. Or you may broaden them to include the ability to amend the trust in the event there has been a change in the law or your circumstances since the trust was formed that would cause strict observance of the trust to be in contradiction to the intent of the trust.
For example, if your trust was written during a time when the estate taxes were a big issue for individuals with smaller estates, your trust may require that many unnecessary and complicated steps be taken to minimize the tax burden upon your death. A trust protector would have the authority to modify the trust so your objective and having your property distributed with as little fuss as possible could be accomplished.
Look at your trust protector as your own personal bodyguard. He or she is there to make sure that your intentions are not disregarded. It goes without saying that anyone that has the ability to amend your trust should have the knowledge and experience required to only do it when necessary. Choosing a trust protector and the powers granted to them should be done with the assistance of a qualified estate planning attorney.
Shawn Garner is a Yuma attorney with Deason Garner Law Firm. Learn more at the seminar at 9:30 a.m. or 6:30 p.m. Thursday. To RSVP, call 783-4466 or visit their website at www.deasongarnerlaw.com.