For every trust there is a trustee. Whether the trustee holds the legal title for the assets of an individual inheritor, a family dynasty, or a large corporation, it all comes down to one word: Trust. Enter the concept of the Protector.

For every trust there is a trustee. Whether the trustee holds the legal title for the assets of an individual inheritor, a family dynasty, or a large corporation, it all comes down to one word: Trust.

Enter the concept of the Protector. As professional trustees who have vast experience gained over 40 years of practice in administering trusts for international clients, we are aware of the important role that a protector can play in promoting the smooth administration of a trust and especially when the trust in question is designed to be utilised as a multi-generational wealth management and corporate governance tool. 

Role of a protector 

Gifting substantial assets to professional trust companies to manage for, potentially, generations to come is not a decision any settlor will reach lightly and, often, great comfort can be found through having a protector within the architecture of the trust structure.

Specifically, a protector might be chosen to be appointed in order that:

a)            the settlor wants someone to monitor the activities of the trustee;

b)            the settlor wishes to have someone who has a special understanding of the dynamics relating to the trust and its beneficiaries to be involved in assisting with the management of the trust/the trust assets; or

c)            the settlor wishes to retain some influence over the trust, at least initially, typically by taking of the role as the initial protector themselves.

Unlike a traditional trust which has the option to appoint a protector, a non-charitable purpose trust is required to have an “enforcer” whose role it is to enforce the trust in relation to its non-charitable purposes.

Legal framework

Given that Jersey trust law permits and recognises the role of the protector and gives substantial latitude to the draftsman to provide for such powers/provisions as may suit the family, VG can work with its settlors to create a tailor-made solution, with the assistance of appropriate legal advice in Jersey and elsewhere.  At the one end, it may be that comfort can be taken by the protector having a power to appoint and remove trustees to ensure that the continued suitability of the trustee in the future is monitored and, if appropriate, changes are made to find an alternative trustee.  Alternatively, a well-chosen protector may be able to assist with explaining complex family dynamics to the trustee or with respect to assets (perhaps such as a family business) that are owned by the trust structure and have commercial or other sensitivities that need to be addressed.

Consult vs. formal powers 

Sometimes, a settlor may simply wish for the protector to be consulted upon by the trustee over certain matters rather than having the protector have formal powers of veto or positive powers to exercise certain functions of the trust.  Whichever solution is preferred, it is likely that the trust deed can be drafted to accommodate the given situation of the settlor.

Where a protector is appointed, it is often the case that they will be given veto powers (i.e. consent is required to the exercise of a power by the trustee) and these powers might extend to providing consent concerning appointment/removal of beneficiaries, dealings with specific assets, appointments of the trust fund to beneficiaries, changes to the proper law or place of administration of the trust, amendments to the terms of the trust, reviewing remuneration arrangements with respect to the trustee or in connection with the termination of the trust.  Protectors are described from time to time as discharging a role of “watchdog” with respect to the trustees but ultimately their function is a matter that turns upon the specific nature of their powers and the drafting of the trust deed.  We encourage settlors to consider setting out their expectations behind the role of protector and any characteristics that they are looking for from both the current post holder and any future post holder in their letters of wishes, so that VG can understand the context of the protector’s role within any given trust of which it may be trustee.

Choosing a protector

Alongside working with Settlors of trusts that we administer as Trustee, we work alongside other trustees where we are not the appointed professional trustee to provide an independent function as a protector and we are familiar with working alongside professional advisors to the family and other professional and lay trustees to promote the orderly administration of your structure over the years.

A well-chosen protector can play a pivotal role in defusing administrative problems, avoiding conflicts and management of the expectations of the family.  In particular, the “watchdog” role can give significant succour to settlors who wish to minimise the risk of litigation.  Our long and battle-hardened experience, derived from over 40 years of focused practice in private wealth and corporate administration, means that we are well placed to provide these connected but entirely distinct services to settlors, where we are not acting as the professional trustee of your trust structure. Where we are your chosen trustee, then we can likewise work with you and your protector to achieve a practical trust model where the distinct roles of protector and trustee are synthesised to promote a model focused on the contemporary needs of the beneficiaries over the course of time.

Talk to us about how VG can provide piece of mind and support to mitigate distressed trust relationships.