Protectors

Protectors

In general terms, the role of a protector is to oversee the proper operation of the trust. In some respects, the protector is like a non-executive director, not engaged in the day-to-day running of the entity, but there to be consulted on major decisions. In most trusts with protectors, the protector will be able to dismiss the trustees and appoint replacements. Certain trustee discretions may also need the consent of the protector – for example, moving the place of administration or making distributions.

The protector can be an individual or a company. But in our view, it should not be the settlor, as this raises real questions as to whether the settlor has actually irrevocably disposed of the assets settled into the trust. The protector also has a fiduciary duty even if this is lower than that of the trustees.

Non-professional individuals should think carefully before accepting a nomination as a protector, and settlors should expect that professional protectors will take an active interest in the trust and will require information in order to make informed decisions. A sophisticated trustee will welcome the involvement of a professional protector, who can give a second opinion in certain cases and, if the trustee is also providing other services to the trust aside from being a trustee (for example, asset management), the protector may well offer some protection against liability to conflict of interest claims.

Rosetrust and its officers act as professional protectors.