Modern trust laws, available only in progressive trust law jurisdictions such as South Dakota, have revolutionized trust formation and administration in the United States. The Trust Protector concept is a modern trust law tool often used in conjunction with a Directed Trust, delivering far more control to settlors of trusts, beneficiaries, and their advisors than ever before. The inclusion of a Trust Protector allows the settlor, beneficiaries, and their advisors to modify and control many important aspects of the trust and provide direction to the trustee with respect to investment management, jurisdiction, and trust distributions. Acting as a “super trustee,” the Trust Protector concept enhances the control aspects of the Directed Trust because it provides for direction or restraint of powers of the trustee.
Reasons why a settlor may wish to appoint a Trust Protector include:
- The settlor wishes for a mechanism to easily replace the trustee or change trust situs.
- Protectors allow for a great degree of flexibility when dealing with changes in circumstances, including both factual circumstances (death, premature divorce, previously unknown children) and legal changes (any legal changes, but most frequently changes to applicable revenue laws).
- The settlor may be concerned that the trustee may not pay sufficient attention to his wishes.
- The settlor wishes certain powers to be withheld from the trustees.
- The settlor wishes a third party to act as a main point of contact between the beneficiaries and the trustees.
South Dakota’s Trust Protector Statute is an example of one of the most robust trust statutes in the nation. Click here for more information on South Dakota Trust Protector Statute, Title 55 – Fiduciaries and Trusts, Section 55-1B-6 – Powers and discretions of trust protector, which includes a specific list of powers available to be granted to the Trust Protector.
For more information about how Trust Protectors can be incorporated into trust planning, please contact Bridgeford Trust via our contact page.
To learn more about South Dakota’s industry leading modern trust laws, including Trust Protector, Directed Trusts, Decanting, Modification, and Reformation, please click here for more information.