[WSBAPT] Trust Protectors

[Mark Vohr]

Requests for information on this role come up all the time during interviews for proposed trustees.  I agree trust advisors/protectors should not be employed to insulate a trustee from liability.  I wouldn't hire a trustee that insisted on it for their own actions and I do not believe a trustee could be relieved of the duty to act in good faith and with honest judgment..  RCW 11.97.010.   But I wouldn't throw the baby out with the bathwater.

Trust Advisors can perform very useful services, particularly in terms of replacing poorly matched or performing trustees or acting as simple interested parties to receive annual accountings and keep them in the loop.  It would make sense to consider using trust advisors, even paid ones, to review annual accountings with minor beneficiaries in the care of their parents to address the instance where the parent has a conflict of interest as in Anderson v. Dussault.  Could be far more cost effective over the use of a court appointed GAL.  I do believe Trust Advisors can be indemnified and held harmless from any liability, which makes sense - otherwise who would serve.


Mark


Ohana Fiduciary Corp.

A Washington Trust Company

Mark C. Vohr, J.D., CPG, Principal
PO Box 33710  Seattle, WA  98133
T:  (206) 782-1189 F:  (206) 782-1434
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From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of John Creahan
Sent: Tuesday, July 31, 2018 10:17 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] Trust Protectors

Doug,
I would be strongly advise my clients against including a provision in their trust document which would appoint a trust protector with the power to bless trustee actions and insulate the trustee from liability. The statutory trust advisor has a fiduciary duty to the beneficiaries - which means, I think, that the trustee to would simply be transferring its liability to the trust protector.
Beneficiaries pay trustees significant fees mostly (perhaps only) because the beneficiaries can sue them if they screw up. I see no reason to allow the trustee to transfer that liability to a third party - particularly if that third party is an unpaid, relatively unsophisticated family member.
My $.02.
John

John Creahan
www.cairn-law.com<https://urldefense.proofpoint.com/v2/url?u=http-3A__www.cairn-2Dlaw.com_&d=DwMFAg&c=euGZstcaTDllvimEN8b7jXrwqOf-v5A_CdpgnVfiiMM&r=K1mLMC1eFjwfeeMM-AC6zQ&m=1mql6tTiroNjqtHMOUOzgTqNFTnMbYwqo6d8KLbljtM&s=Txv5uIIQM7UJgCx-8CLSKicpCX3v6QzCS1IUaaYw6lU&e=>
206-578-5877
Fremont office:
3417 Evanston Ave. N, Suite 312
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From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> <wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com>> On Behalf Of Douglas Bratt
Sent: Tuesday, July 31, 2018 3:08 PM
To: wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>
Subject: [WSBAPT] Trust Protectors

Listmates:

I have recently been doing some research regarding the role of a Statutory Trust Advisor, which is discussed in RCW 11.98A.030.

The gist of the appointment of a Statutory Trust Advisor seems to be the desire to have a mechanism, particularly in high asset situations, with potential multiple generational beneficiaries, to have someone, or some institution (separate from the Trustee) empowered to oversee the Trust and the Trustee to make sure that the focus of the original trust is being adhered to, to make adjustments in trust provisions, as may be advisable because of changes in the law, to approve discretionary distributions to beneficiaries, and the like.  The earlier reading seemed to be that this is something that the Trustor might be interested in to essentially keep the Trust on track.

However, later reading has led me to the conclusion that Trustees themselves, particularly institutional Trustees, are insisting on the appointment of a Trust Protector (the phrase used by at least one institutional Trustee, and a phrase included in the statutory definition of a Statutory Trust Advisor) in order to seemingly remove the Trustee from criticism (and possible liability) in exercising discretionary powers (like discretionary distributions to Beneficiaries) that Trustees have traditionally been empowered, and expected, to do.  Review of Trust Instruments by Trustees, prior to acceptance of the responsibilities of serving as Trustee, includes a requirement, in some instances, that the Trust Protector provisions be in place, with a prospective Trust Protector already designated.

Has anyone been running into these sorts of situations?  Do any of you have reference to Washington-based materials and/or Washington forms used in these sorts of instances?  I am dealing with a proposed institutional Trustee who, I suspect, has such requirements in place.

I thank all of you, in advance, for your thoughts.

Best Regards,

Doug Bratt


Douglas J. Bratt
Lawyer

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