Change is inevitable. What happens when circumstances change and you have an irrevocable trust? Usually you have to resort to going to court to have a judge modify the irrevocable trust. However, if the trust includes a trust protector clause, the Trust Protector may be able to modify the trust without resorting to an expensive and public court process.
What is a Trust Protector?
During the estate planning process, the person putting assets in a trust (the Grantor) should consider naming a Trust Protector. The Trust Protector’s job is to ensure that the Grantor’s wishes are fulfilled.
When naming a Trust Protector, the Grantor will specify the powers that the individual holds. Although anyone can be named in this role, it is recommended that you name someone who is an independent third-party and who is unrelated to the Grantor and the beneficiaries. Many Grantors name an attorney or financial advisor, but there are also companies who may be willing to serve.
A Trust Protector’s Purpose
The main purpose of a Trust Protector is to provide an estate plan with long term stability by adapting the trust to changes in finance, law, or the lives of the Grantor and their beneficiaries. The protector can only exercise powers given to them by the Grantor but must act in a manner that would properly carry out the Grantor’s wishes. Some of their powers can include adding, changing, or removing a trustee, making legal amendments to properly correspond with changes in the law, resolving disputes between beneficiaries, and assisting in making investment decisions.
Having a Trust Protector provides additional flexibility to trust, allowing it to be modified if circumstances change. If you are creating a trust, you might want to include such a provision to ensure your trust continues to meet your goals for years to come.
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Nielsen Law PLLC provides family focused estate planning to individuals and families in Austin, Round Rock, Cedar Park, and the Central Texas area. For more information and to learn about our firm, please contact us.