In a legal trust arrangement, the trustee holds legal title to the trust property and administers it in accordance with the terms of the trust and in the beneficiaries’ best interests. The trustee owes a fiduciary duty to the beneficiary and is charged with administering the trust impartially, in good faith and prudently. The concept of a trust protector has become increasingly popular as a check and an oversight on trustees.
A trust protector is essentially some person or entity which watches over the trustee for any malfeasance or misconduct. In the event of wrongdoing, the trust protector has a variety of options, including removal of the trustee. A trust protector is often used to maintain the privacy of the trust because trustee removal typically is litigated in court publicly.
Missouri law was previously unclear on the legal functions and duties of a trust protector, in part because it was a term associated with offshore trust practice. Robert T. McLean v. Patrick Davis, 283 S.W.3d 786 (Mo. Ct. App. 2009). Section 456.8-808, however, was amended to provide clarity on the issue by defining a trust protector as a person, other than the settlor, a trustee, or a beneficiary, who is expressly granted in the trust instrument one or more powers over the trust. A trust protector may have a variety of duties, including the power to terminate the trust in favor of the beneficiaries, modify/amend the trust, make changes to the trust to account for tax changes, or removal of trustees. Moreover, while a trust protector is a fiduciary, its fiduciary duties are more narrow than that of the trustee:
A trust protector shall act in a fiduciary capacity in carrying out the powers granted to the trust protector in the trust instrument, and shall have such duties to the beneficiaries, the settlor, or the trust as set forth in the trust instrument. A trust protector is not a trustee, and is not liable or accountable as a trustee when performing or declining to perform the express powers given to the trust protector in the trust instrument. A trust protector is not liable for the acts or omissions of any fiduciary or beneficiary under the trust instrument.
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