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Designing an estate plan can be a delicate balancing act. On the one hand, you want to preserve as much wealth as possible for your family by protecting it from estate taxes and creditors\u2019 claims. On the other hand, you want to have some control over your assets during your life.<\/p>\n
Unfortunately, these two goals often conflict with each other. Generally, the most effective way to remove wealth from your taxable estate and shield it from creditors is to place it in one or more irrevocable trusts. But, as the name suggests, an irrevocable trust requires you to relinquish control over the trust assets. One potential solution to this problem is to appoint a trust protector.<\/p>\n
Trust protector\u2019s duties<\/strong><\/p>\n A trust protector is often compared to a member of a corporation\u2019s board of directors. A trustee manages the trust\u2019s day-to-day affairs while the trust protector serves in an oversight capacity to prevent trustee mismanagement and to participate in certain major decisions.<\/p>\n A trust protector\u2019s specific powers are set forth in the trust document. Among other things, powers may include adding, changing or eliminating beneficiaries\u2019 interests; replacing a trustee; and amending the trust or redirecting distributions to comply with new laws or to reflect beneficiaries\u2019 changing circumstances.<\/p>\n One advantage of using a trust protector is that you can confer powers on the protector that you wouldn\u2019t be able to hold yourself without exposing your assets to creditors or triggering gift or estate taxes.<\/p>\n Bear in mind that a trust protector should be distinguished from a trust advisor,<\/em> who\u2019s available to advise the trustee but has no power to make binding decisions on trust matters.<\/p>\n 2 primary benefits<\/strong><\/p>\n Trust protectors offer two primary benefits:<\/p>\n 1. They provide a check against mismanagement, fraud or abuse by the trustee.<\/strong> A trust protector might have the power to remove or replace the trustee, or veto certain decisions, if the trustee isn\u2019t acting in the beneficiaries\u2019 best interests.<\/p>\n 2. They allow you to build some flexibility into an otherwise rigid estate planning tool.<\/strong> Many people are reluctant to transfer assets to an irrevocable trust for fear that changing tax laws or changing circumstances years or even decades later may affect the trust\u2019s ability to achieve their original goals. At the same time, they may be hesitant to provide the trustee with too much discretionary authority over the trust. A trust protector can step in if circumstances change and modify the trust or take other actions to ensure that the trust continues to accomplish your estate planning objectives.<\/p>\n Scope of a trust protector\u2019s powers<\/strong><\/p>\n What powers should you grant your trust protector? The answer depends on the nature of your estate plan, your family\u2019s situation, the capabilities of the trustee and your specific estate planning objectives. But in most cases, it\u2019s advisable to limit the trust protector\u2019s authority to relatively narrow circumstances. Contact us if you have questions regarding the role a trust protector should play in your estate plan.<\/p>\n \u00a9 2022<\/em><\/p>\n <\/body> Designing an estate plan can be a delicate balancing act. On the one hand, you want to preserve as much wealth as possible for your family by protecting it from estate taxes and creditors\u2019 claims. On the other hand, you want to have some control over your assets during your life. Unfortunately, these two goals […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7,9,10],"tags":[8,11,12],"class_list":["post-15854","post","type-post","status-publish","format-standard","hentry","category-articles","category-estates","category-news","tag-articles","tag-news","tag-updates"],"_links":{"self":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/15854","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/comments?post=15854"}],"version-history":[{"count":0,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/15854\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/media?parent=15854"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/categories?post=15854"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/tags?post=15854"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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