Trust Protectors

The Wisconsin Trust Code, effective July 1, 2014, introduced the role of a trust protector to Wisconsin law.

A person who creates a trust may appoint a trust protector, and assign the trust protector one or more powers.  Such powers may include, but are not limited to, the following:

-          Interpret or correct errors or ambiguities in the terms of the trust;

-          Resolve disputes between the trustee and a beneficiary;

-          Modify or amend the trust instrument in response to changes in federal or state law; and

-          Remove and replace a misbehaving successor trustee.

It is important to specify the legal capacity in which the trust protector powers are to be exercised (e.g., fiduciary capacity or nonfiduciary; and if nonfiduciary, whether a power must be exercised in good faith).

In most cases, it’s probably best not to appoint a beneficiary to serve in this role (nor a relative or subordinate of a beneficiary), though the trust code does not prohibit such an appointment. 

The trust protector can add value to a trust by serving to ensure that the trust functions as intended – even, and especially, when the person who created the trust is unavailable to do so.