Trust Protectors: A Practice Manual with Forms - PDF eBook
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The trust protector is generally regarded as a relatively new position in trust law, and the key feature of the position is that the protector may be granted powers over the trust, which are generally superior to those of the trustee. This places the protector in a position where, by the exercise of his powers, he can cause the trust to adjust to unforeseen changes or new conditions without the need for court action or beneficiary approval. This work takes the firm position that, with only limited exception, the role of the protector is a fiduciary one, imposing on the protector a duty to act in the best interests of the purposes of the trust and the beneficiaries.
Unfortunately, a substantial segment of the legal community, as well as the legislative bodies of a number of international jurisdictions, have taken a position that the protector is not a fiduciary, or that he may be declared in the trust not to be a fiduciary, and that the power granted him under the trust may be declared to be personal powers, whether or not such is the case, and thus he would have no liability for his actions or inactions while serving as protector. This “attraction” of providing total exculpation of the protector has effectively engendered a quick acceptance of the position by the bulk of the legal community and even by the legislatures of a number of jurisdictions, though almost totally unsupported by relevant case law. As a result, we have been seeing trusts which incorporate the use of a protector having the power to make critical dispositive and administrative decisions, as well as extensive modifications to the trusts without being exposed to liability for negligence or bad decisions which result in damages.
This work will examine in detail the role of the protector of the trust, the relationship between the protector and the trustee, between the protector and the beneficiaries, and the protector’s responsibilities to the purposes of the trust. It will demonstrate with legal support that the role of the protector is not a new role, that, in fact, the protector is simply a new name for the decades-old position of trust “advisor,” and that the trust advisor is consistently regarded as a fiduciary in relevant treatises and has been repeatedly held to be a fiduciary in relevant cases. The discussion will also review and analyze the historical issues and professional commentary relevant to trust law and the role of protector, as well as case decisions in various international jurisdictions which have shed light on the issues and some of the positions taken in the statutes of a number of jurisdictions in the United States and across the world. All legal aspects of the role will be examined, including the rights of the protector, the protector’s relationship to the trustee, and the courts’ regard for and treatment of the position.
Further, the work will discuss in detail all of the practical considerations in using a protector, such as selection and special drafting considerations, the use of a protector in a foundation, and, in brief, the numerous tax issues that may apply. The conclusion will be that with only very limited exception, which will be explained, the protector is unquestionably a fiduciary, and just as a trustee, he should be held to fiduciary standards. Accordingly, while it is certainly possible to grant personal powers to an individual under a trust, those powers per se conflict with the duties of a protector. And while it is also possible to reduce the fiduciary liability of a protector to a minimum, it is not possible to eliminate it entirely, regardless of trust language attempting to do so.
Alexander A. Bove, Jr. is a widely known and respected trust and estate attorney with over forty years of experience. He is an Adjunct Professor of Law, Emeritus, of Boston University Law School Graduate Tax Program, where he taught estate planning and advanced estate planning for eighteen years. In 1998 he was admitted to practice in England and Wales. Alexander Bove has been quoted in the New York Times, The Wall Street Journal, Business Week, Worth, Forbes, Money, and Fortune as an authority on trusts and estate planning and asset protection planning. From 1973 to 1995 he authored the widely acclaimed legal and financial column, "The Family Money," for theBoston Globe. He has published several books on subjects of estate planning, asset protection planning, taxes, trusts and estates. An internationally known lecturer in his fields of expertise, Mr. Bove has lectured at the annual Heckerling Tax Institute, annual meetings of the American College of Trust & Estate Counsel (ACTEC), the Association of Advanced Life Underwriters (AALU), The Million Dollar Round Table (MDRT), Top of the Table, The Annual Notre Dame Estate Planning Institute, and The International Academy of Estate and Trust Law. Mr. Bove was named in "The Best Lawyers in America, Trusts and Estates" for 2012 - 2013, was named Estate Planner of the Year by the Boston Estate Planning Council, and was elected to the National Estate Planning Hall of Fame in 2014. He recently received his Ph. D. in law from the University of Zurich law school.
"Trust Protectors is a valuable textbook and practical guide for the trust and estate practitioner. The author is to be commended for his extensive research and the sensible advice he offers."
-- Click to view the full book review from S.T.E.P.
-- Alon Kaplan TEP, Managing Partner of Alon Kaplan Law Firm and Chair of MMG Kaplex
"Trust protectors, their status as a fiduciary, their duties and liabilities, their relationship with the trustee, and their rights and powers largely remain an unchartered area of the law. Bove's book is an excellent guide to successfully navigating these waters."
-- Click to view the full book review from Massachusettes Lawyers Weekly
-- Eric P. Hayes, Goodwin Procter
"...Bove's treatise contains comprehensive and helpful chapters on the difference between treating a trust protector as a fiduciary versus someone with a personal power (like a general power of appointment), potential liabilities for trust protectors (and the lawyers who draft trust protector clauses), the relationship between the trust protector and the trustee and, most importantly, 63 pages on "Practical Issues in Using Protectors." This is the part of the book that most special needs planners will find themselves coming back to for ideas and insight into topics like the selection of a trust protector, drafting considerations and detailed descriptions of virtually any powers that could be given to a trust protector."
-- Click to view the full book review from the Academy of Special Needs Planners, ElderLaw Answers --Eric Prichard, Brown & Brown, P.C.
"Alexander Bove's wide-ranging and scholarly research into the laws of all jurisdictions featuring protectors has produced a most thoughtful and practical book. It provides valuable stimulating insights to enable draftspersons, litigators and judges to perform their roles to the highest standards."
--Justice David Hayton, Caribbean Court of Justice, Author, Underhill & Hayton, Law of Trusts & Trustees, 16th Edition
"Dr. Bove's Trust Protectors is not just a 'practice manual with forms.' It also is a scholarly treatise dedicated to clarifying and organizing trust protector doctrine. The content is immediately useful, the scholarship rock-solid, and the coverage encyclopedic. We North Americans no longer need look beyond our shores for the answers. It is all there."
--Charles E. Rounds, Jr., professor, Suffolk University Law School, Member of the Massachusetts bar, co-author of Loring and Rounds: A Trustee's Handbook
"Divided trusteeship, including trust protectors, is the most significant fiduciary development in current trust practice. Alexander Bove's new book on the subject makes a timely and important contribution to trust practice and scholarship."
--Robert H. Sitkoff, John L. Gray Professor of Law, Harvard Law School
"Trust Protectors is an exceptionally well researched, extremely authoritative book that makes it easy to learn the subject and find the answers to difficult questions you'll need to know. As its title implies, this is a practice tool, written by probably the most skilled and knowledgeable practitioner in the United States on the subject. If your practice involves trusts -- you need this book!"
--Steve Leimberg, Publisher, Leimberg Information Services, Inc. (LISI)
"Until now little critical thought had been given to a trust position that has become very popular with trust practitioners. Alexander Bove, Jr. has responded to that vacuum with a very thoughtful and comprehensive examination of the office of the trust protector and of the question whether a protector should be considered a fiduciary. He provides the historical underpinnings of the office, examines the salient cases on the subject in depth, such that the practitioner who reads Mr. Bove's work will come away with a sound understanding of exactly why he or she is drafting particular trust protector provisions in a specific way. Literally every important issue about trust protectors is considered, down to providing a surprisingly detailed list of criteria for choosing a person to fill that role. To state that Mr. Bove's treatment of trust protectors is exhaustive would be to understate the matter. Certainly, for anybody who drafts, reviews, or otherwise advises on trust documents, Mr. Bove's book is one for which the characterization of 'must read' is a precise fit."
--Jay D. Adkisson, Riser Adkisson, LLP
"Alexander Bove has produced a thoughtful and comprehensive treatise on the role and office of protector. He has addressed the topic with insight and intellect and met head-on the challenge of a dearth of case law. This work is indispensable for all lawyers deploying protectors and advisors in the trust context."
--Duncan E. Osborne, Partner, Osborne, Helman, Knebel & Deleery, L.L.P.
"As will be obvious from the detailed Table of Contents, Alexander Bove, Jr. is a world authority on Protectors. His book is infused with brilliant theory, yet at the same time it is extremely practical. This is an invaluable guide to Protectors: where they came from, what they are, and what they are not. At all levels one can rely on the author for his admirable thoroughness and attention to detail. Every estate planner should own this book."
--Barbara R Hauser, Independent Family Advisor, Barbara R Hauser LLC
“Trust protectors are controversial, particularly because a lack of precedents has left courts and practitioners wondering about the exact nature of a trust protector’s role. This problem is especially acute in the U.S., where meaningful precedents border on non-existent. Alexander Bove’s Trust Protectors ably fills this void, primarily by focusing on several key themes and weaving them into a thoughtful and coherent analysis of the protector’s role…His [Alexander A. Bove] work is scholarly, insightful, practical, and should be part of every serious trust attorney's library."
-- (Click to view the full book review from Estate Planning 2/2015,V. 42/No. 2)
-- John E. Sullivan III, founder Sullivan & Sullivan Ltd.