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What are some benefits to designating a trust protector?

A person in Moorestown may have spent his or her whole life accumulating assets, such as stocks, bank accounts and real estate. Building your own personal wealth can be extremely satisfying, but financial planning doesn't end there. Individuals in such situations should contemplate what will happen to these hard-earned assets after they pass away. For this reason, some individuals create a trust as an estate planning vehicle to pass their assets on to future generations. A trust provides instructions on how the creator of the trust wants his or her assets distributed upon his or her death.

However, even those who love each other can sometimes disagree on certain matters, particularly during an emotional time such as the death of a loved one. What happens if, after the creator of the trust is gone, there are disagreements about how to interpret the terms of the trust? To prevent situations like this, when creating the trust adding a trust protector provision may be a sound move.

A trust protector provision names an individual whose role in the trust will be to interpret it in the event that the beneficiaries and trustees do not agree on how it should be followed. This individual should remain neutral so as to decide what the intent and purpose of the trust is. In most instances, the trust protector is neither a trustee nor a beneficiary. He or she only needs to step into the role of trust protector when there is need for clarity in the interpretation of the trust.

The creator of the trust can decide how much power to give the trust protector. Sometimes the trust protector's role is limited to resolving disagreements that the trustees and beneficiaries have about the trust. Or, the trust protector may be granted the authority to amend the terms of the trust, for example, to reflect a change in law or circumstances that would cause a contradiction with the intent of the trust should the current terms of the trust be strictly followed.

As you can see, there can be many benefits to naming someone as your trust protector. Sometimes disagreements can best be resolved by a neutral individual. Moreover, it can be reassuring to know that someone is there to ensure that the intentions of the creator of the trust will be followed. An estate planning attorney can provide interested individuals insight on how to choose a trust protector.

Source: Yuma Sun, "Estate Planning: Who oversses a trust administration?," Shawn Garner, Aug. 8, 2016

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