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  • Writer's pictureMatt Devitt

The Importance of a Trust Director

Trust directors, formerly called trust protectors in Michigan, are an invaluable tool for handling unforeseen problems whether caused by beneficiaries, changes in the law, or changes in the market. While most revocable trusts do not require the addition of trust director, many of the more complex trust including special needs trusts, and high asset trusts often do.

While there is no precise definition of a trust director, the common definition is a person other than the trustee who, through the language of the trust, is authorized to play a part in the administration of the trust. Also, a trust director can be more than one person, usually a panel of three, and is referred to as a trust committee.

A simple way to think about a trust director is a business comparison. The trustee is like a Chief Executive Office of the Trust, and the trust director acts like the Board of Directors by weighing in on critical decisions. The balancing act that a good estate planning attorney will help you find is not giving the trust director to much authority as this could stymie the original trustee’s ability to manage the trust.

Power of Trust Directors:

Just as there is no simple definition of what a trust director is, there is no one size fits all or boilerplate list of powers. However, the most common powers granted are..

  • The power to remove the trustee: A protector with the power to remove and replace the trustee can do so if the trustee develops a conflict of interest or fails to manage the trust assets in the beneficiaries’ best interests.

  • Add or remove a beneficiary: A protector with the power to change the way trust assets are distributed if necessary to achieve your original objectives can help ensure your loved ones are provided for in the way you would have desired.

  • Terminate or litigate a trust: A protector with the power to modify the trust’s terms can correct mistakes in the trust document or clarify ambiguous language.

Who Would Make a Good Trust Director?

Almost all trust directors should be a fiduciary of the settlor. A fiduciary is a person who holds a legal or ethical relationship of trust with one or more other parties. Also, when choosing an individual trust director, not a corporate or attorney trust director, the director will usually be chosen based on the knowledge of the asset or the person who the settlor would like to protect.

Many individuals will also appoint a trusted advisor, such as an accountant, attorney, or investment advisor who may not be willing to serve as a trustee, but who can provide an extra layer of protection by monitoring the trustee’s performance.

If you have an existing revocable trust, or are creating your first trust, and you believe that complexities may require the addition of a trust director, make sure to discuss this with your attorney.

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