This week, we shall be looking at the factors to consider in appointing a Protector for your Trust arrangement and the kind of powers you can vest in her.
Factors to Consider in the Selection of a Protector
This is very important to enable the protector perform her role. This will majorly depend on fiscal considerations among others.
The second consideration is the need to have adequate provision for succession of a protector and to ensure that the protector maintains a continuing interest in acting as one. You will agree that there is no sense in appointing a protector without the relative guarantee that she will carry out her duty and diligently so.
The person to be appointed requires skills to carry out her responsibilities under the arrangement. It is thus advisable that a professional of repute particularly an institution is appointed in this regard.
It may be important particularly in offshore asset protection arrangements to appoint an entity domiciled outside the Settlor’s domicile, ditto the domicile of the Trust itself. This is to ensure that where the protector needs to act, she would be free from any form of influence within that may want to prevent her from acting.
What can protectors do?
The duties of a Trust Protector could hardly be gleaned from any law in particular. The principal document that defines the role of a Trust protector is the Trust Deed or Declaration governing the Trust. Hence, what the protector can do will be determined by the terms and conditions in the Trust Deed or Declaration itself.
The primary role of a Protector is to monitor the activities of the Trustee. In other word, the protector is a watchdog over the Trustee. In performing this onerous duty, he may be asked to consent to the exercise of certain powers given to the Trustee. Where the Trust property is settled on discretionary trust arrangement, the Settlor is likely to have expressed to the Trustee her wishes in relation to such discretions. The protector in this wise may readily be called upon to ensure that the wishes of the Testator are carried out to the letter and religiously. It is also the duty of the protector to review the Trustee’s accounts.
The principles of equity place an obligation on the Trustee to be ready and willing to give account of her dealings in the trust property to the beneficiaries. This can pose a bit of challenge where the trust is discretionary and there is a large volume of discretionary objects. The question that arises is whether the Trustee is still accountable to the beneficiaries despite such discretion.
One simple way out of this quagmire is to mandate the trustee to give account of her dealings to the protector who can review and approve them despite the discretionary objects. The protection may be empowered to approve the remuneration of the Trustee. He may be called upon from time to time to agree a scale of fees in terms of which the Trustee is to be remunerated and to confirm that fees charged by the Trustee have been earned in accordance ith that scale. The protector may be given power to remove a Trustee and appoint a more compliant Trustee in her stead. This will also include the power to ensure proper succession where a Trustee retires in the ordinary course of business.
Another power frequently given to protectors is the power is the power to add and remove discretionary objects from the class of beneficiaries of a discretionary trust. The enumerated powers are not exclusive as there are many more powers you can give to your appointed Protector.
The powers of the Protector are protective of the Trust and not to destroy it. Whom the Protector however protects largely depends on the responsibilities he is saddled with. In most cases, the goal is to protect the beneficiaries of the Trust and the legacy of the Settlor.
