The Role and Function of a Trust Protector in California

A trust protector is someone who protects your trust beneficiaries from the actions of a rogue trustee. This party may be an individual, a bank, or a trust company. The powers of a trust protector varies from trust to trust, depending on the needs and priorities of the settlor. A trusts and estates attorney can help you determine the powers of a trust protector, and determine whether you even need one at all.  

California trusts and estates law does not codify the rights and duties of a trust protector. As such, a trust protector’s role depends on the terms of the trust document, combined with California legal precedents. Trust protectors are typically not involved in the day-to-day administration of the trust. The most common power that a trust protector possesses is the power to replace a trustee. 

Typical Powers Granted to Trust Protectors

In California as well as nationwide, trust protectors often enjoy the power to:

• Modify the trust document for the sake of favorable tax consequences, especially in response to changes in tax laws;

• Modify the interests of any beneficiary of the trust, with good cause and within certain defined limitations);

• Change a power of appointment granted to any trustee for good cause; 

• Remove or appoint a trustee or other authority over the trust (an investment advisor, for example);

• Terminate the trust for a good cause;

• Ensure that the trustee(s) distribute the trust property in a manner that is consistent with the purposes of the trust (this may require a veto power over distribution);

• Change the governing law of the trust, especially in response to adverse changes in trusts and estates law;

• Interpret the terms of the trust document (within certain limitations);

• Advise the trustee(s);

• Amend the trust document to improve the administration of the trust, especially in response to adverse changes in trusts and estates law; and

• Appoint a successor trust protector;

Not all trust protectors enjoy all of the foregoing powers. In fact, most trust protectors enjoy one or a few of them.

Entitlement to an Accounting

You might think that a trust protector would have the authority to demand an accounting (financial report) of the trust to perform their duties. In the case of  Carberry v. Kaltschmid, however, the California Court of Appeals ruled that a trustee is not entitled to an accounting unless the trust instrument specifically codifies this right. For this reason, you should codify the right to an accounting in the trust document, if you want the trust protector to enjoy this power. 

Estate Planning Attorney Masumi Patel Can Help

California estate planning attorney Masumi Patel can help you decide whether you need a trust protector or not, and she can help you appoint the right candidate if you do decide that you need one. She can also help you design a comprehensive estate plan that will avoid nasty surprises for your beneficiaries. Contact the Law Office of Masumi Patel immediately to schedule a consultation, so that we can answer your questions and advise you of your options.