Trust Protectors Preserve Grantors’ Wishes

Trust protectors are included in both revocable and irrevocable trusts to enforce a grantor’s instructions. Their powers commonly include demanding trustee accountings, removing or replacing trustees and moving a trust’s legal situs to a state with more favorable law.

Protectors are often lawyers, accountants or relatives who are not beneficiaries. Grantors specify the protector’s authority in the trust document, which can be limited to particular acts or written broadly to allow response to changing circumstances.

Common powers assigned to protectors include ordering financial accountings, removing trustees for misconduct or incompetence, appointing successor trustees, selecting a substitute charity if a named charity ceases to exist, and changing the trust’s domicile to states such as Alaska or Nevada. A protector can also authorize a transition from an individual trustee to an institutional trustee for ongoing management.

Trust lawyers describe situations where protectors restrict distributions or replace trustees after events such as lawsuits, accidents or divorce to preserve trust assets for beneficiaries. Spendthrift provisions are often used alongside protectors; those clauses limit when beneficiaries can access funds and can restrict creditor claims against assets held in trust.

Martin Shenkman, partner at Shenkman Tietz, observed that financial advisers who meet clients quarterly may spot family problems earlier than attorneys who meet less frequently. He added: “If you’re meeting quarterly with somebody, if they’ve got a ‘bad’ kid, at some point they’re going to complain to you.”

Kevin Matz, partner at ArentFox Schiff, pointed to unexpected events that can jeopardize inheritances and said a protector could select a new charity or make other changes when circumstances require.

Joe Sicchitano of Principal Financial Group explained: “If I have spendthrift provisions in that trust, a creditor that’s trying to go after the beneficiary has limited access to those assets because they are controlled by a spendthrift provision in the trust.”

Lawyers advise precise drafting to ensure protector powers are clear and enforceable. Moving a trust to another state can provide legal or tax advantages but involves administrative steps and additional costs. Appointing an institutional trustee can increase professional oversight and continuity while raising fees compared with an individual trustee.

The trust protector concept originated in offshore trust practice and has been adopted in U.S. estate planning as a way to allow grantors’ directions to be upheld after death or incapacity without immediate court intervention.