In creating a trust with four heirs , one son will be Trustee , is it necessary to have a third party " Trust Protector ? "

Asked over 1 year ago - Culver City, CA

I heard from a friend who has a Revocable Living Trust for his home , an Irrevocable Trust for other assets ( real estate rentals ) , and a Mei - Cal protection trust , that his attorney inserted a provision for a Trust Protector , in case of disputes amongst heirs . The 3rd party Trust Protector has all kinds of powers ( charge fees to review any and all docs but is indemnified from any action or inaction ) . There are 3 heirs and one son is the Administrative Trustee . My friend the Administrative Trustee was told this Trust protector and having a Distribution Trustee other than himself was required otherwise there would be tax implications . In this set up , is it required to have a Trust Protector and have the Armin Trustee different than the Distribution Trustee ?

Attorney answers (8)

  1. Joseph Michael Pankowski Jr

    Contributor Level 18

    8

    Lawyers agree

    1

    Answered . It is not necessary to have a "Trust Protector" in your circumstances, but likely advisable. You are putting one son in a difficult spot with his siblings should a dispute arise. They likely fought on the couch over a toy several decades ago. Imagine them "lawyering up" over a house, an investment account, etc. Probate litigation is the worst possible thing for sibling relationships after a parent dies. Please consult with a qualified estate planning attorney in California to discuss your options in order to avoid this nightmare.

    This information is presented as a public service. It should not be construed to be formal legal advice nor... more
  2. Eric Jerome Gold

    Pro

    Contributor Level 19

    6

    Lawyers agree

    Answered . As stated by my colleagues, you are not required to have a Trust Protector as part of your trust. However, depending on your particular situation and the nature of the relationship between the trust beneficiaries, it may be a prudent move. You should discuss all of this with an estate planning lawyer in your area. If you need a referral, try the local bar association or the Avvo Find a Lawyer tool.

    ** LEGAL DISCLAIMER ** My response above is not legal advice and it does not establish an attoreny-client... more
  3. Kelvin P. Green

    Contributor Level 18

    5

    Lawyers agree

    Answered . There are no requirements to have a protector or separate trustees. This is entirely based on wishes of settlor...

    This is for general information only. Nothing in this information should be construed as creating an attorney-... more
  4. Sean Patrick Lewis

    Contributor Level 17

    5

    Lawyers agree

    Answered . I agree with others that preceded me. Although a trust protector isn't likely necessary, I would also advise that areas of trust administration that give the trustee discretionary powers be closely examined to determine not only how flexible the trust allows the trustee to be, but whether those flexible areas are ones where contention might later develop.

    Your estate planning attorney can help with this.

    The above is not intended to be legal advice, but may be used for general information. Please contact an attorney... more
  5. Veronica L. Jarnagin

    Contributor Level 12

    5

    Lawyers agree

    Answered . A "Trust Protector" is a relatively recent concept. It is not necessary. Further, in most cases, it is not even advisable due to the extra cost. Where members of the family get along, where the named trustee keeps the beneficiaries informed, where the trust does not last long past the settlor's (decedent's) death, etc., then the presence of a third party simply adds cost and can create unnecessary friction. The Settlor's desires and intentions -- not those of the third party Protector who is seeking fees -- are paramount to this decision; and should the pros and cons of each should be discussed with her/his attorney. Good luck.

    veRONIca jarnagin, atty, pc provides this response as general guidance and not specific legal advice. If you... more
  6. William F. Bernard

    Contributor Level 8

    2

    Lawyers agree

    Answered . There is no "protector" requirement. Have you considered successive trustees; co-trustees; an independent third party trustee? Consult with an informed estate practitioner who is armed with the specific backround of your family history.

    Please be advised that this communication is for general public informational use only and does not establish an... more
  7. Joseph Franklin Pippen Jr.

    Pro

    Contributor Level 20

    3

    Lawyers agree

    Answered . A Trust Protector' is a great tool to use as a way to settle disputes among heirs.
    It is just one of the many options to consider when discussing with your estate planning attorney.

    The answer given does not imply that an attorney-client relationship has been established and your best course of... more
  8. William Martin Burbank

    Contributor Level 12

    1

    Lawyer agrees

    Answered . Although the statement "a trust protector is not required in a trust is accurate" it is probably not a complete answer. Trust protector provisions will add a little in the complexity of a trust, they can provide tremendous benefit if needed. We draft such provisions in most of the irrevocable trusts we draft, but have actually only had to use them a couple of times. But when you do need them they can add tremendice flexibility to an "irrevocable trust" in ways that would otherwise likely cause trust assets to be included in an estate and subject to estate or gift taxes. (40%) But estate inclusion is only an issue for estates greater than $5,250,000 in 2013. But the flexibility and the ability to clear ambiguities, make changes in the trust if circumstances arise that were not foreseen but would change the grantor's intent.

    Attorneys that do a lot of advanced planning generally understand the benefits of trust protectors and use them regularly. If your attorney is suggesting them, he is probably such an attorney as attorneys that don't understand the benefits don't recommend them.
    It sounds to me like you are in good hands.

    Every situation is different, it is important to discuss your legal issue with a knowledgeable attorney in your... more

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