When we speak about trust in legal terms, many legal professionals instantly think about three principal roles: The Grantor (or “Trustor”), the Trustee, and the Beneficiary. The Grantor, being the creator of the trust, bestows the Trustee with the right to manage property for the benefit of one or multiple Beneficiaries. The primary use of trusts in estate planning is to save time and costs by avoiding the traditional probate system. However, a fourth role is emerging which is often overlooked – the role of the Trust Protector.
According to an article by Dunlap Bennett & Ludwig PLLC, the concept of the Trust Protector takes trusts a step further by including an extra layer of control or protection. Trust Protectors are often useful when trusts may need modifications due to changes in law or unforeseen circumstances that could impact the administration of the trust.
The idea of the trust protector originated from offshore trusts which were used to prevent any predatory claims against the trust assets. It’s an important role, given the protector the ability to oversee the trustee’s management of the trust, and in some situations, remove the trustee if they are not acting in the best interests of the beneficiaries.
As the role keeps evolving, it will be interesting for legal professionals to take note and consider the use of trust protectors to provide added benefit and protection to their clients. This could open up discussions around regulatory frameworks and the potential standardization of the trust protector role, perhaps even formal legislation to oversee its implementation.
While trusts continue to be a valuable tool in legal estate planning, careful consideration will need to be given to the role of a trust protector, its legal implications, benefits, and potential risks involved. This is a nuanced field with significant implications for corporate law, estate planning, and bespoke client services.