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Trust Protectors and Professional Fiduciaries: When Should You Add Extra Protections to Your Trust?

When creating your estate plan, one of the most important decisions you make will be who serves as the trustee of your trust. Most people choose trusted family members or friends to serve in this position and for a simple family trust those choices are appropriate. However, when the trust holds an interest in a business or a professional corporation or has complicated family dynamics, choosing a trustee can be far more complicated. Professionals can be used in these cases to assist in the administration of these more complicated trusts, including Trust Protectors, Professional Fiduciaries, and Corporate Trustees.

Trust Protectors are people nominated specifically in the trust agreement and granted special powers that are separate from the general powers and responsibilities of the trustee. For example, you may name your brother as the trustee of the trust but your friend, who is a Certified Public Accountant, could serve as the trust protector to provide an extra level of protection to the administration of the trust.

Professional Fiduciaries are individuals who are specifically trained to manage the assets of other individuals who entrust their finances to the fiduciary. In California, they have completed over thirty hours of specific training, have passed an extensive background check, are bonded and licensed by the state.

Corporate Trustees are typically trust companies that may be affiliated with major financial institutions (i.e. banks). They are impartial third parties who can provide an entire team of financial professionals and extensive resources to the administration of your trust. They must meet the extensive compliance standards for both the federal and state governments.

Using a Trust Protector, Professional Fiduciary, or Corporate Trustee (or a combination of the three) can provide the necessary technical and professional experience to sustain a complicated trust. Considering a professional fiduciary or a corporate trustee as the successor trustee to the trust can also provide a layer of security to the trust administration and potentially dissuade battling parties from litigating disputes.

Whether you need to create your estate plan or review your existing plan, VRS can assist you in discussing your goals and how best to achieve them.