Who Are Trust Protectors and How to Use Them in Irrevocable Trusts

by | Dec 7, 2023

In this video, we explore the concept of Trust Protectors and their pivotal role in irrevocable trusts. Traditionally, an irrevocable trust would entail transferring assets to the trust, relinquishing all control. However, this was unsettling for many clients, especially when dealing with substantial assets.

Over three decades ago, Trust Protectors emerged to oversee trustees, safeguarding the trust and its beneficiaries. Initially used in offshore trusts with unknown trustees, Trust Protectors evolved in the past decade, granting them significant control over trust assets.

When setting up an irrevocable trust for clients, we aim to eliminate their direct control over the assets for estate tax planning, income tax planning, asset protection, or anonymity. To address clients’ concerns, we empower Trust Protectors to retain control on behalf of our clients, making them an integral non-fiduciary part of the trust structure.

Trust Protectors often hold the power to revoke or amend the trust, modify beneficiaries, change trustees, alter trust governance, and even adjust tax treatment. This elevated level of authority makes the Trust Protector a key decision-maker, potentially surpassing the trustee’s influence.

To ensure our clients maintain a level of control, they can appoint a trusted friend or family member as the Trust Protector, granting them the ability to dismiss and appoint new protectors. This ensures ultimate client oversight while benefiting from the protector’s expertise.

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