The Role of a Trust Protector in Ohio Estate Plans

Trust Protectors are third parties whose purpose is to direct the Trustee in matters concerning a trust. A Trust Protector's role is to ensure the intentions of the trust creator are met and that the Trust is serving the rationale for which it was initially established. Trust creation documents usually spell out the duties being granted and the trust protector's primary realms of authority. When circumstances of the trust, the economy, the assets in a trust, the beneficiaries, the law change from those anticipated by the trust creator, the trust protector may be granted power to modify the trust terms to accomplish the trust creator’s intentions under the changed circumstances.

Who Can Be A Trust Protector

Because of the requirement of independence, a trust protector should not be a relative of the trust creator or any of the Trust's beneficiaries or named trustees. There are times when the trust protector is named explicitly in the Trust creation documents. Naming a specific trust protector is appropriate when the time horizon for the trust is the near terms or foreseeable future.

Regardless whether a trust protector is named or designated by criteria, the trust should include provisions for appointing successor trust protectors and for removing existing trust protectors. The trust should also designate whether the trust protector is a permanent position or one that comes into being as needed and then terminates until called upon again. Usually trustees or current income beneficiaries of the Trust may appoint and remove trust protectors who meet the criteria established in the trust.

The Trust Protector's Powers

A trust may grant a trust protector broad and expansive powers or limited powers to modify specified provisions. At the very least, a person or institution in this role ought to have the ability to remove and select replacement trustees. Trust protectors may also be afforded authority to resolve trustee disputes or issues between trustees and beneficiaries. It may also be wise to permit a trust protector to adjust the provisions of the Trust in response to changes in economic conditions or tax provisions impacting the Trust itself.

Powers of this nature are essential for dynastic trusts to survive well into the future. A trust protector may have the ability to end the Trust in its entirety, change trustee powers, adjust the legal jurisdiction of the trust or remedy drafting errors or ambiguous provisions in the trust creation documents.

Compensating Trust Protectors

It is necessary to provide for the compensation of a trust protector for the services rendered to beneficiaries and trustees alike. The trust creation documents ought to articulate the precise method by which payment will be determined and paid to the protector.