In addition to a trustee that oversees trust asset distributions, a trust protector can also be appointed in order to oversee the trustee. A protector can be granted powers as broad as replacing a trustee or vetoing investment decisions based on changing circumstances or a shift in tax laws. While having a trust protector can add another level of security, it is important to choose a trusted advisor like an accountant or investment advisor. Choosing a family member may result in an unintended general power of appointment that could have negative gift/estate tax liability consequences to the protector.

See E. Hans Lundsten, Joseph Marion, III, David Riedel, and Christina Scola, “Will your estate plan benefit from a trust protector?,” JDSupra Business Advisor (December 10, 2014).

Posted by Ryan Moore, Associate Editor, Wealth Strategies Journal