A trust protector is recognized under Florida trust law and may be more influential than you realize. Both trustees and beneficiaries should understand who this “legal actor” is. And, what she can do !
Do you have a revocable trust? Do you use domestic and off shore trusts together to control your wealth? You may already be familiar with the idea of a “trust protector” that may assist Florida trusts. She may guide a trustee of a trust in its administration. Traditionally these were not very common for Florida Trusts. A West Palm Beach appeals court however has recognized them in a relatively recent case. How does this change trust litigation and trust administration in West Palm Beach?
What is a Trust Protector?
- You may be asking yourself what is a trust protector?
- This term is much more common in off shore or foreign trusts.
- Usually a settlor would be weary of trusting a private trust company to oversee their entire trust in a foreign country.
- But, that country usually had favorable laws such that it was good for the wealth to be over there.
- Family trusts would use something known as a protector to aid the trustee in administration.
- This also created a sort of private dispute resolution mechanism for these trusts as the protector could help iron out any disputes between trustees and beneficiaries.
- In fact the protector of the trust may be able to appoint a new trustee!
Why Appoint a Trust Protector?
- There are a few reasons why a trust protector may be a good idea.
- For one a protector allows a great deal of flexibility for a trust to adapt to changes in circumstances that often cannot be predicted well enough to be included in a trust instrument.
- For example what if a main beneficiary passes away suddenly or the industry of choice for investments dries up? A protector can address these.
- A settlor may also be concerned that the trustee will begin to ignore his wishes, here the protector may act as a form of back up to enforce the intent of the settlor.
- The settlor may also simply want certain powers kept out of the hands of the trustee.
Does West Palm Beach Use Protectors in Trust?
- Florida law authorizes the use of trust protectors.
- That being said they are not particularly “common.”
- The Fourth District Court of Appeals dealt with this issue in the 2014 case of Minassian v. Rachins (Fla. 4th DCA December 3, 2014).
- In this case the settlor named his estate planning attorney as his protector because that man knew his intent.
- The settlor knew that his children may not be thrilled with his plans for his wealth, especially one estranged daughter.
- The children filed a lawsuit against the wife after the man’s death (like he predicted) alleging she had breached her fiduciary duty in administering the trust.
- When the trial court ruled in favor of the children the wife did something tricky, she pulled out the trust protector and told him to rewrite the trust to match her objectives prior to the litigation.
- And it worked!
- The Fourth DCA held that it was legitimate and proper under Florida law, do you agree?
- Does this make it too easy to get around breaches of fiduciary duty claims OR is it making it harder for people to improperly challenge the purposes of trusts for their own gain.
- No matter which way you spin it, Experienced Palm Beach probate litigators will probably start using this trick more now!
Want to learn more about this interesting case?
Click here to read the entire thing for yourself and decide, does your trust need a protector?
