If you follow my blogs, you know by now that our law firm not only prepares Wills and Trusts. We also do probate litigation. This means that we go to court to handle messy family feuds over inheritances. One of the most common type of lawsuit has to do with a trustee who steals money, mismanages the investments, or for various reasons needs to be removed. A basic check and balance for a trust is to have a “Trust Protector” named who can remove an irresponsible trustee and appoint a successor. In this post, I will explain why your trust needs a Trust Protector.
That fact is that life is unpredictable. You have absolutely no guarantee that the people you named as trustee in your trust will actually do what you want. I have seen this too often. Let me give just a couple of real life examples.
Example One: Husband and wife sign a trust. They say that if husband dies, husband’s father and wife will be co-trustees. (This was a good idea at the time; it was one form of check and balance.) But, what wasn’t planned for? That husband and wife would get a divorce, husband would die shortly after that, and that the husband’s father would make off with all of the trust property, leaving the wife and kids impoverished. This could have easily been avoided if a Trust Protector had been named who could easily remove husband’s father as trustee and appoint a new truste.
Example Two: As mentioned by Jay Adkisson in a Forbes article from 2012, let’s assume that in your living trust you simply make one of your heirs/beneficiaries the Trustee. “The problem here is that you can’t predict the future. Maybe by the time you die the new Trustee has developed a drug problem, or maybe the Trustee harbored a grudge against one of the other heirs/beneficiaries and now wants them to get nothing (even though you wanted them to get their share). Without a Protector, the situation is bad. But with a Protector, the new Trustee can be fired.”
If your trust does not have a Trust Protector, I encourage you to amend it to include one. Personally, I prefer to have the protector have very broad powers, but also have a fiduciary duty. Thus, they are somewhat like a trustee, except that their powers are different from the trustee’s powers. The Trust Protector’s responsibility is to provide a check and balance to the trustee. The trustee is the active manage. The Trust Protector rarely gets involved except when needed to remove a trustee, modify the trust, or make other permissible changes.
This is not to be done by lay people. See a competent estate planning attorney.
P.S., if you are wondering what’s with the coat of arms and tartan, here’s my explanation. The Deloughery Coat of Arms shows horses, which are a symbol of loyalty. Also, there is a knight’s helmet. These are all symbols of protection and loyalty. These are good traits for a Trust Protector (and for a trustee, for that matter). The tartan in the background is the official Deloughery of Scottsdale tartan, duly registered in Scotland (which is where even Irish tartans need to be registered). I see a Trust Protector as being something like a knight … always on guard to protect the family fortune if necessary.