Estate planners are increasingly using trust protector provisions in trust documents. While these provisions can be flexible and preserve the intent of a trust’s grantor, they also come with risks and complexities. A panel of the trust and estate planning attorneys at Braverman Law Group are hosting a CLE/CPE course to provide a practical guide to structuring trust protector provisions and discuss best practices.
What Are Trust Protector Provisions?
Trust protectors are third parties given power within a trust provision to make adjustments to the terms of trusts in a way that complies with the intent of the trust’s grantor, or the person establishing the trust. Trust protectors provide an extra level of flexibility not available in a traditional trust. These are especially useful in long-term trusts when the circumstances surrounding the parties to a trust may change substantially. A trust protector helps protect the spirit and intent of the trust when changes would not be otherwise possible.
What Are the Risks?
While trust protector provisions allow for more flexibility, they can be complex and subject to abuse. Different states and jurisdictions have varying laws surrounding the power of a trust protector and the structure of those powers. For example, a range of actions can be taken by a trust protector, and different jurisdictions limit those actions in different ways. Some allow trust protectors to modify trust terms, while others allow trust protectors to oversee the actions of the trustee. Trust protectors can sometimes make elective distributions, change the trust’s situs, or even replace the trustee. Trust agreements can identify the trust protector’s powers and designate the fiduciary extent, but estate planning counsel must fully understand the breadth and scope of the risks and consequences.