Wednesday, December 08, 2010 NEET Tips
NEET Tips answers questions posed online to the NEET website.
What is a Trust Protector?
A trust protector, also known as a trust advisor, is a person serving in a fiduciary capacity that may amend a trust to bring it up to date with changing federal or state tax laws, change the governing law or principal place of administration of the trust, and perform other specific duties or functions normally completed by a trustee, among other powers. Trust protectors are frequently included in trust documents to add flexibility, particularly where beneficiaries receive their inheritance in trust. Because beneficiaries’ trusts could be in existence for several decades, it is important to ensure that the trusts can be updated so that they remain current with changing tax and trust laws. Absent the ability to update a trust, the trust may become obsolete and of little practical use. The beneficiary would then lose the benefits of retaining their inheritance in a trust.
Trust protectors are usually named and given specific powers spelled out in the trust document, although pursuant to the Vermont Trust Code, 14A V.S.A. § 1101, a court or beneficiaries acting in agreement pursuant to provisions in the trust, may empower a trust protector to have specific powers or duties.
Determining who should be the trust protector requires balancing several factors, which is a discussion to have with an experienced estate planning attorney.
See the article: Building Flexibility Into Estate Plans with Trust Protectors |