TRUSTS AND CASTLES

You will wonder about the connection between trusts and castles. The answer is that both are designed to be repositories of wealth, and both need protectors.

The trust protector is a concept that has recently become widely used in domestic trusts. We have used the trust protector for many years in offshore trusts.

The essential parties to a trust are the grantor, who establishes the trust, the trustee, who administers the trust, and the beneficiaries, who receive money or other benefits from the trust. The trust protector is a person, not the trustee or a beneficiary, who is given powers over a trust.

The future of the federal estate tax law is uncertain. There may be significant changes in the next several years. We draft trusts to include a trust protector, who has the power, among other things, to change the terms of the trust to accord with the tax law at the time that the trust is operating.

The trust protector may be given the authority to select among beneficiaries or to establish the terms under which beneficiaries will receive funds under the trust. The trust protector may also be given the authority to remove a trustee and appoint a successor.

Sometimes, if a trust does not work under existing conditions, a beneficiary or the trustee may petition the probate court to amend the trust. This can be a lengthy and expensive process and is not always possible. Having a trust protector specified in the trust instrument with the power to amend the trust makes changing the trust easy and inexpensive.

Castles were designed to be safe places to keep wealth. After seeing a number of castles, I wondered why the staircases in the towers all were built so that they turned in a clockwise direction.

Finally it appeared clear - the protector of the tower was a man with a sword. A person seeking to attack the towers, advancing up a clockwise stairway, would have no room to swing his sword, whereas the tower protector would have plenty of room to respond sharply.

Trusts have replaced castles to hold wealth. The trust protector is one way we make your trust better able to serve you.