Understanding the Role of a Trust Protector in Modern Trusts

At Equiom, we understand that trust planning is deeply personal and often complex. One question that frequently arises is whether to include a Trust Protector in a trust structure. While this concept has become increasingly common, it’s important to understand what a Trust Protector does, when they might be needed, and the practical considerations involved.  

 

What Is a Trust Protector? 

A Trust Protector is an individual or entity appointed under the terms of a trust deed with specific powers to oversee the Trustee. These Trust Protector powers typically include:  

• Appointing or removing the Trustee  

• Approving or making investment decisions  

• Amending the terms of the trust  

• Adding or removing beneficiaries  

• Approving distributions 

By exercising these powers, the Protector can monitor, and in some cases influence, how the Trustee administers the trust. These powers are generally fiduciary, and must be applied in the best interests of the beneficiaries. 

The role is not defined by statute in most jurisdictions and may also be referred to as an Appointor, Supervisor, or Guardian. Its primary purpose is to ensure the Trustee acts in accordance with the trust deed and relevant law. 

The concept of a Trust Protector emerged towards the end of the 20th century as a means of addressing concerns from Settlors who wished to retain some degree of influence after settling their assets into a trust. Historically, the role was often loosely defined, and succession planning for the Protector was frequently overlooked. Today, modern trust deeds set out the Protector’s powers, remuneration, removal, and succession provisions with greater clarity.  

  

Is a Trust Protector Necessary? 

In short, not always. 

Where a reputable corporate Trustee is appointed in a well-regulated jurisdiction, a Settlor can usually be confident that the trust will be administered properly. Courts also have sufficient power to intervene if a Trustee fails in its duties. 

A common question for families establishing or updating a trust is when a Trust Protector becomes necessary, and what circumstances genuinely justify their appointment. 

Although the inclusion of a Trust Protector may add an extra layer of oversight, it can also create administrative delays. For example, when a beneficiary requests a distribution or a change in investment strategy, additional approvals may slow down decision-making, particularly where timing is critical due to market volatility. 

That said, a Protector can be particularly useful where the trust’s main assets consist of shares in a family business. In such cases, the Settlor might appoint someone familiar with both the business and family dynamics, knowledge a Trustee may not possess. This is often of particular interest to Settlors from Asia and the Gulf Region, where preserving the family entrepreneurial experience can be an important consideration.  

However, the decision to include a Trust Protector should be made carefully. Key considerations include who will act, what powers they will hold, succession planning, and how the Protector can be removed if the relationship between the Protector, Trustee, or beneficiaries deteriorates. 

 

Trust Protector Powers 

The Trust Protector plays a vital role in safeguarding the interests of beneficiaries and ensuring the trust is managed according to the Settlor’s intentions. To fulfil this role, the Protector is typically granted specific powers within the trust deed, but these Protector powers may be negative (for example, a veto right) or positive (such as the ability to appoint or remove a Trustee). Common powers include: 

• Power to appoint or remove the Trustee 

• Power to approve or make investment decisions 

• Power to approve or amend the terms of the trust 

• Power to add or remove beneficiaries 

• Power to approve distributions 

The scope of these powers should therefore always be clearly defined within the trust deed to avoid ambiguity or potential conflict. 

 

Who Should Act as Trust Protector? 

One of the most important considerations for Settlors is who is best placed to act as a Trust Protector in the long term. 

A Trust Protector may be either an individual or an entity (such as a company or foundation). 

Historically, Protectors were often trusted family advisers or friends of the Settlor, usually acting without remuneration. However, individual appointments can raise several practical issues: 

• Does the individual have sufficient expertise and time? 

• Are they comfortable assuming fiduciary responsibilities? 

• Are they aware of potential reporting obligations under AEOI (Automatic Exchange of Information) frameworks? 

• Are they independent enough from the beneficiaries to remain objective? 

• Who will succeed them if they can no longer act? 

A corporate Protector may overcome some of these challenges but introduces others. For example: 

• How is the corporate Protector constituted and governed? 

• Will it make trust administration more complex or time-consuming? 

• How will conflicts between the Protector and Trustee be resolved? 

• What will the costs be to the trust fund in terms of remuneration? 

• Will the corporate Protector have sufficient understanding of the beneficiaries’ circumstances and needs? 

• Will the corporate Protector act as a barrier to the Trustee establishing a closer relationship with the beneficiaries? 

  

Empowering Trusts for the Future: Key Takeaways on Trust Protectors 

The appointment of a Trust Protector has become increasingly common and can provide reassurance to both the Settlor and beneficiaries. Ideally, the Protector acts as a conduit between the beneficiaries and the Trustee, offering valuable insight while ensuring that the Trustee administers the trust in the beneficiaries’ best interests. 

For many families, this raises a broader question: how can a trust be structured to remain resilient and future-proof across generations while preserving the Settlor’s intentions? 

However, as with any fiduciary relationship, tensions can arise. A poorly chosen or overly powerful Protector can hinder, rather than help, effective trust administration. 

The decision to include a Protector should therefore be made on a case-by-case basis, taking into account the structure of the trust, the nature of the assets, and the needs of the beneficiaries. Professional fiduciary advice should be sought at the trust planning stage to determine whether a Protector is necessary and what powers they should hold. 

 

How Equiom Can Help  

Equiom has extensive experience establishing trusts across multiple jurisdictions, including those with reserved powers and Protector provisions. We work closely with clients and their legal advisers to ensure the right balance of control and flexibility, providing peace of mind and future-proofing wealth structures to meet changing family circumstances.  

Ready to explore whether a Trust Protector is the right fit for your trust? Contact our expert international Private Wealth team today for tailored guidance that safeguards your legacy and supports long-term family goals. 

 

 

This article has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. This article cannot be relied upon to cover specific situations, and you should not act, or refrain from acting, upon the information contained within this article without obtaining specific professional advice. Please contact Equiom to discuss these matters in the context of your particular circumstance. Equiom Group, its partners, employees, and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this article or for any decision based on it.