Event: Structuring Trust Protector Provisions

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.

There are also tax and fiduciary risks at hand, prompting estate planning attorneys to take caution. For example, the Uniform Trust Code states that a trust protector is a fiduciary unless the trust document specifies otherwise and have the same fiduciary duties as trustees. Even so, if a situation arises in which a trust protector is not serving as a fiduciary, this can sometimes pose risks to the trust or the beneficiaries.

In addition, changes to the terms of a trust can have gift and income tax consequences. Estate planning attorneys should be aware of these potential consequences and make provisions in the trust documents to avoid substantial exposure, if necessary. Unintended tax consequences can expose beneficiaries to risk and deplete the trust, even if the trust protector believed they were acting in accordance with the grantor’s intent.

How to Attend

To attend the event, contact eve@braverman-law.com for more details. This event is open to estate planning counsel and advisors and will provide a practical guide to structuring trust protectors.

Colorado Estate Planning Attorney

If you and your family are beginning your estate planning journey, call the experts. Contact the Boulder estate planning attorneys at the Braverman Law Group. To schedule a free, no-obligation consultation with one of our trusted attorneys, give us a call today at (303) 800-1588.