• Riley Carbone Kern and Laurel Carbone Kern

Every Trust Needs A Hero

Let's talk about Trust Protectors. WHAT IS THAT? Even if you have a trust, it is likely that you and your attorney did not discuss or nominate a Trust Protector. If you're not sure what a Trust Protector is or why you might need one, keep reading.

01/What A Trust Protector is NOT

A Trust Protector is not a beneficiary of your trust, so none of the trust assets belong to them. And a Trust Protector is not a Trustee of your trust, so they are not in charge of managing or distributing assets. Your trust MUST have designated trustees and beneficiaries, but there is no requirement to name a Trust Protector.

02/What A Trust Protector IS

A Trust Protector (sometimes called a Trust Adviser) is someone who stands "outside of" your trust and has specifically crafted authorities to ensure that your trust continues to work as intended. We sometimes call the Trust Protector the "Conscience of the Trust" or the "Trust Hero." (Laurel keeps saying we need to distribute capes to the Trust Protectors. Not a bad idea.)

03/What A Trust Protector Can Do

There's a lot that could be said here, so let's focus on the most common things people need Trust Proctors for.

  • Trust Protectors can provide "tie breaking" advice when co-trustees aren't in agreement.

  • Trust Protectors can remove trustees who aren't functioning well (or at all) and replace them with someone better suited to the task.

  • Trust Protectors can nominate new trustees to fill vacancies if and when designated successors are unable or unwilling to serve.

  • Trust Protectors can request trust accountings from time to time in order to ensure everything is running smoothly (or that trustees aren't self-dealing).

  • Trust Protectors can amend your trust if and when the law changes in order to ensure it continues to serve the needs of your beneficiaries, in most cases helping to limit potential income and estate tax liabilities.

  • Trust Protectors can interpret ambiguities in your trust that become an issue, typically for third parties.

  • And they can do all of this (and more, if you say so) without needing to go through court.

04/Who Shouldn't Be A Trust Protector

A Trust Protector should not be anyone in your immediate family (spouse, parents, siblings, children) and can't be an employee of yours or anyone whose financial stability depends on keeping you happy.

05/Who Should Be A Trust Protector

Well, there are two schools of thought about this.

  • You could nominate your best friend. They don't have to be a lawyer or financial planner. They don't even have to be literate. (joking. kind of.) They just need to be someone you trust to look out for your best interests and the best interests of your beneficiaries. The benefit of this Trust Protector is that they know you and your family, so they will likely be protective (key word) of your interests. The downside is that they may not necessarily be legally or financially sophisticated and, therefore, may make an unwise decision even with the best of intentions.

  • Or you could nominate someone we call a "technician." This is an attorney, a CPA, a financial adviser, or some other legal or financial professional who better understands the implications of their role. The benefit of this Trust Protector is their know-how. The downside is that their work usually comes with a fee. To be clear, they cannot charge a fee simply for being named as a Trust Protector. They can only charge for any work that they may do on behalf of your trust.

06/Do You Need A Trust Protector

Maybe. Maybe not. Here are some fairly common situations when a Trust Protector can come in very handy and save the family a lot of time and money as an alternative to hiring more attorneys or going through court.

  • When you become incapacitated, or when you die, your revocable trust will become irrevocable. At that time, changes in the law, tensions in the family, and vacancies in trustee complicate things for your beneficiaries. The right Trust Protector can address those needs efficiently.

  • If you already have an irrevocable trust - for Medicaid or VA benefits qualification, for special needs, for asset protection, or for tax planning - changes in the law or changes in your relationship with trustees may mean you need to amend your trust. The right Trust Protector can save you from having to pursue judicial modification.

Do those things happen to everyone with a trust? Certainly not. Can we accurately predict who it will and will not happen to? Certainly not. What we can say is this: Trust Protectors give you increased options and flexibility when there is a need to modify a trust.

If you have a trust but have not nominated a Trust Protector, reach out to us or your estate planning attorney to discuss your options.

If you want to know more, we would love to talk with you about it. Best part, the conversation about how it could benefit you doesn't cost anything. Contact us at (918) 770-8940 or to set up a free consultation, either in person, video chat, or phone call. Disclaimer: Reading this blog post does not create an attorney-client relationship, and it is not formal legal advice. This is for information purposes only. Your best bet, always, is to speak with an attorney about your questions, assets, concerns, and needs.

#trustprotector #revocabletrust #irrevocabletrust #assetprotection

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