Text

In some jurisdictions a trust protector is allowed to exercise critical powers in a non-fiduciary capacity, provided the terms of the particular trust specify that he may do so. See, e.g., 12 Del. C. §3313(a); IMO Ronald J. Mount 2012 Irrevocable Dynasty Trust U/A/D Dec. 5, 2012, C.A. No. 12892-VCS (Del. Ch. Sept. 7, 2017) (the Vice Chancellor honoring a provision in a trust instrument that the protector shall exercise his expansive powers in a non-fiduciary capacity). It would seem that such arrangements are actually pseudo-trusts, accountability being the sine qua non of a true trust. One has to wonder why a typical prospective settlor who has been fully informed of the applicable facts and law would ever knowingly elect to deprive his beneficiaries of fiduciary protections. Look for suits against lawyers and others who fail to apprise their principals of the cons, as well as the pros, of settling such pseudo trusts. Cf., §9.9.25 of Loring and Rounds: A Trustee’s Handbook (The Quiet or Silent Trust May Not Be a True Trusts), which section is reproduced in its entirety in the appendix below. It goes without saying that a trust protector who had been acting as estate-planning lawyer for the settlor of a pseudo-trust would have been subject to fiduciary constraints for his pre-settlement interactions with the settlor notwithstanding the terms of the trust.

The article has been downloaded and is available below.