When reviewing the estate planning documents with our clients prior to their signing, one of the roles that regularly stumps people is the Trust Protector, which I call the Special Co-Trustee. Most people are aware of many of the terms in the documents such as trustor, trustee and beneficiary and the roles these people serve. However, the Special Co-Trustee can add flexibility to a trust for unforeseen future events.
The client can name a Special Co-Trustee when the trust is drafted or a Special Co-Trustee can be appointed at a later date. Usually a Special Co-Trustee will be a trusted advisor with special skills related to taxes, business and estates. The Special Co-Trustee should be someone independent that can look at the situation they are called upon to address with knowledge and objectivity. Some of the powers given to a Special Co-Trustee are:
- Valuing closely held business interest
- Voting powers in a family business
- Determining whether certain items are income or principal
- Gifting powers
- Working with assets located outside the State.
The Special Co-Trustee is given amendment powers for circumstances which were not present when the document was created. Since we know that taxes are ever changing, and it is difficult to write a document now that can foresee all the tax ramifications of the future, the Special Co-Trustee can amend the trust for changes in the tax laws. Additionally, the Special Co-Trustee can be asked to resolve disputes between the trustee and the beneficiaries.
A Special Co-Trustee or Trust Protector is an important and valuable role in estate planning. If you have questions about how to incorporate a Special Co-Trustee into your estate plan, contact your estate planning attorney for assistance.
If you are interested in finding out more about estate planning, estate administration and elder law, visit www.sinclairprosserlaw.com. The website is comprehensive and contains many tools to help you assess your estate planning needs.
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