A trust protector is a party designated in a trust agreement with certain limited powers intended to protect the trust. A trust protector is not needed while you are alive, if you are the trustee and beneficiary of your own living or revocable trust. However, eventually you will die and the successor trustee will step in to administer the trust.
This new trustee may not have your best interests at heart when administering the trust. For instance, the trustee may start to milk the trust for fees and reimbursement of expenses for whatever reason, draining the trust assets. Another bad scenario involves the trustee with a grudge against one or more beneficiaries, where the trustee has no intention of treating the beneficiary properly. A trustee has a duty to treat all beneficiaries in a fair and impartial manner, but you will not be around to see that they do. The only recourse is expensive litigation.
How does a trust protector help in these situations? By using his or her powers to change trustees. A trust protector provision should have three sections:
(1) Empowering the protector to terminate the trustee and appoint a new trustee;
(2) Empowering the protector to appoint successor protectors; and
(3) Stating that the protector is not a trustee and owes no fiduciary duties to anyone and has no duty to act.
Needless to say, you need to nominate a person to be a trust protector only whom you greatly trust. Any trust agreement may benefit from a trust protector provision including irrevocable trusts.