The term 'protector' is used to describe a person who is generally granted by a settlor (under the terms of a trust deed) some powers over the administration of a trust – such power to be exercised in addition to powers granted to the trustees.
The protector does not have the same powers as a trustee and whilst the protector would not be involved with the day-to-day administration of the trust, they will have to fulfil certain duties and responsibilities and will also be given certain powers under the terms of the trust deed.
There are a number of reasons why a protector would be appointed. Some examples of these are:
(i)When a trust is established, legal ownership and control over the trust assets is transferred to the trustees. Appointing a protector provides the settlor with the comfort of someone who independently oversees the trustees' actions.
(ii)The protector may be appointed to act as a central point of liaison between the beneficiaries and the trustees and to resolve any disputes which may arise from time to time. If no protector is appointed then the courts can be used to settle disputes. However, the courts will only intervene in narrowly defined circumstances, which can be a costly and lengthy process.
It is not essential to have a protector and the majority of settlors do not appoint a protector. They see such an appointment as adding an extra layer of administration and expense.
Anyone can be appointed as a protector, as long as they are over 18 and have full mental capacity. The settlor can appoint themselves or can appoint: a member of their family, a trusted family adviser or friend, or an individual or institution providing professional fiduciary services to be the protector.
The powers and duties of the protector are fiduciary in nature. The protector is under no duty to enquire into or interfere with the management or conduct of the trust unless they have actual knowledge of circumstances which call for an enquiry.
In summary, whether to appoint a protector or not will be down to individual settlors and their requirements. To review what powers the protector has under a Royal Skandia, Royal Skandia Trust Company or Skandia Life Ireland trust refer to our article 'Powers and duties of a protector relating to Royal Skandia's, Royal Skandia Trust Company and Skandia Life Ireland's trusts'.
The information provided in this article is not intended to offer advice.
It is based on Skandia's interpretation of the relevant law and is correct at the date shown at the top of this article. While we believe this interpretation to be correct, we cannot guarantee it. Skandia cannot accept any responsibility for any action taken or refrained from being taken as a result of the information contained in this article.