What is a Trust Protector in California?
When creating your trust in California, having a trust protector is essential for many reasons. Here’s a guide on what you should know.
Introduction
There is a good chance that you have, at some point, heard of a trust. And, maybe you even know what a trust is or what it does. Maybe you even have one. But, have you ever heard of a trust protector?
Well, just like many legal steps we encounter, a series of checks and balances ensures that business is handled appropriately and that the proper steps are followed. To put it in most simplistic terms, this is what a trust protector does. This independent 3rd party is there to make sure that the trust is handled in the manner it was intended.
Those who establish a trust do so to protect their estate – and their loved ones. Upon one’s death, emotions run high, grief can be crippling, and relationships can become strained. Appointing an outsider to oversee the trust relieves this burden from those closely involved.
The Parties Involved in a Trust
Believe it or not, there are many individuals involved in a trust.
The shortened version of the parties involved are:
- Beneficiary
- Settlor or Grantor
- Trust Protector
The beneficiary is the individual or individuals who receive the distribution from the trust. The Settlor (Grantor) is the one who has created the trust. This is the property and asset owner, and the one who determines who will be listed as a beneficiary. The Trust Protector is the one who makes sure all the Settlor’s wishes are met and that the beneficiaries are located and given exactly what was intended.
The Role of a Trust Protector
Since we are talking about trust protectors, let’s dig a bit deeper into their role, shall we?
Here are a few of the most common roles they will face:
- Remove and/or replace a trustee.
- Handle legal changes when beneficiaries become divorced or deceased.
- Allow the trust to be amended when the law has changed.
- Find resolutions to disputes between trustees or beneficiaries.
- Adjust distributions due to law or circumstances in a beneficiary’s life.
- List new beneficiaries when new descendants are born.
- Override potential investment decisions.
The powers of the trust protector will vary and should be clearly stated within the trust document, as well as the specific name of the individual. The more specific you are in all aspects, the better chance the trust will be handled and distributed as intended.
Hiring an attorney is a great way to ensure that all the necessary details are provided – and that you aren’t giving your trust protector too much or too little power.
Why Have a Trust Protector?
You may question whether or not you need a trust protector. After all, that is just one more person involved in your personal affair, isn’t it? If you find yourself on the fence here, you will be glad to know that there are many benefits to listing someone in your trust.
A trust protector can help you maintain your best interest at all times. If this means removing a trustee or appointing a new one, then consider it done. If you need a beneficiary added or removed, they can do that too. Handling distributions and terminating the trust are also duties of trust protectors.
Sure, anyone can handle these jobs. But, when you create a trust, you do so to protect your estate and those you love. Not following through with a trust protector opens you up to the risk that your wishes may not be met how you intended. Since your trust is there to protect, you can rest easy that it will as long as you have a trust protector in place.
Types of Trusts that Benefit from a Trust Protector
There are different types of trusts, such as revocable trusts, irrevocable trusts, dynasty trusts, and special needs trusts. So, do they all need a trust protector? How do you know if your trust is one that will benefit from having someone in this role?
Two of the most common trusts that could benefit from a trust protector are:
- Irrevocable Trusts. This type of trust is one that is created and cannot be changed, altered, modified, or revoked. Any time property is placed into an irrevocable trust, it cannot be removed – even by the one who created it. Because control of the assets is essentially given up, you want a trust protector listed who can oversee the trust.
- Special Needs Trusts. This type of trust is established to help an individual obtain governmental benefits. If someone is listed as a beneficiary in a trust and is set to receive a large inheritance, this is often placed in a special needs trust. Otherwise, that one-time payment could halt government assistance. These trusts are completely legal but can get a little tricky – as it is looking out for the care of someone. Having a trust protector can be very helpful here, too.
Who Can Serve as a Trust Protector?
When it comes to selecting a trust protector for your trust, you can choose anyone you want – which means you can choose a family member or good friend. The idea, however, is that you want someone you can trust who may be able to see things clearly when the time comes. Often, choosing someone that is closely involved in the family can lead to high emotions and may even be detrimental to long-term relationships.
The best choice is an independent third-party. This individual will likely receive payment for services from your trust, will be working on your behalf. He or she will have a clear understanding of what you do and don’t want and will be able to follow through with your wishes without any attachment issues.
Opting for an attorney as your trust protector means you have someone who can help you set up the trust from the get-go, be specific about powers, and legally handle the rights of the trust when the time comes.
Conclusion
A trust protector in California is an essential component of any trust – and choosing one is a big decision. Talk to an attorney to know your options and the best steps you can take to protect yourself, your loved ones, and your trust.
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