June 4, 2012
Authored by: Justin Flach
On their way out the door on May 18, 2012, the Missouri Legislature approved S.B. 628, which included a revision to R.S.Mo. 456.8-808 setting forth a first of its kind, comprehensive statute governing the powers, rights and duties of “trust protectors.” Unless derailed by the Governor, this statute would become law on August 28, 2012 and could set an example for other states grappling with the roles trust protectors play within the modern estate planning world.
So what is a “trust protector” anyway? Under the Missouri statute, a trust protector would be someone other than a settlor, trustee, or beneficiary who is given power over the trust by the trust instrument. Trust protectors are used in modern estate plans to provide flexibility in trust administration and can be given any powers set forth in the trust instrument necessary or appropriate to carry out the purposes and intentions of the settlor in creating the trust. Most importantly, a trust protector is not responsible for protecting the trust.
Many states that have enacted statutes governing trust protectors have merely declared that a trust protector is or is not a fiduciary. Instead of simply declaring that a trust protector is or is not a fiduciary, the new Missouri statute addresses and provides default rules concerning a variety of issues relating to the use of trust protectors. Unique to the new Missouri statute are sections regarding the relationship between the trustee and the trust protector, compensation, indemnification, access to trust information by the trust protector, resignation, and court jurisdiction.
While the new Missouri statute provides a comprehensive framework for using trust protectors, it should not be assumed that trust protectors are needed for every trust or that each trust protector should be granted every possible power. The decision of whether or not to use a trust protector for a particular trust should be carefully considered by a client and his or her attorney. If the Missouri trust protector statute becomes law, however, it will provide clients and their attorneys with flexible guidance on the use trust protectors and the issues to be addressed in the trust instrument when use of a trust protector is appropriate.