For hundreds of years, trusts have had three key players. The settlor is the person who establishes the trust. The trustee is the person responsible for the operation of the trust. And the beneficiary is the person (or persons) who the trust is intended to benefit. Recently, a fourth role — that of the trust protector — has become increasingly important.
Trust protectors are a very important part of an asset protection trust. They are less common in a standard estate planning trust (but are increasingly used there as well).
The settlor of the trust chooses the initial trust protector. The powers of the trust protector will be determined by the terms of the trust, and in some instances by state statutes. A trust protector may have the right to remove the trustee, amend the trust, veto distributions, and can have various other rights and responsibilities. The trust protector is essentially someone who can make sure the trust is being administered the way the settlor intended. Thus, the trust protector is literally empowered to “protect” the trust.
Carefully picking the right trust protector for a trust is just as important as picking the right trustee.