What a Trust Protector Can Do
A trust protector is someone named in the trust document who holds specific powers, separate from the trustee. Arizona law recognizes this role and allows a wide range of authority.
The exact powers depend on what the trust document grants.
A trust protector appointed by the trust instrument has the powers, delegations and functions conferred on the trust protector by the trust instrument. These powers, delegations and functions may include the following: 1. Remove and appoint a trustee. 2. Modify or amend the trust instrument for any valid purpose or reason, including, without limitation, to achieve favorable tax status or to respond to changes in the internal revenue code or state law.
A.R.S. § 14-10818(B)Trust protectors can also adjust beneficiary interests, change the trust's governing law, and modify powers of appointment. These tools are valuable when life changes after the trust is created.
Limits and Liability
The statute places two key guardrails on what a trust protector can change. First, they generally cannot grant an interest to someone not already named in the trust. Second, they cannot change a governmental unit's interest in a special needs trust.
The trust document can override both of these limits.
Except to the extent otherwise specifically provided in the trust instrument, a modification authorized under subsection B of this section may not: 1. Grant a beneficial interest to an individual or a class of individuals unless the individual or class of individuals is specifically provided for under the trust instrument.
A.R.S. § 14-10818(C)One important point: a trust protector is not a trustee or fiduciary under Arizona law. This means they face a lower standard of liability than a trustee.
As a result, a trust protector can act on their own without the full weight of fiduciary duties that apply to trustees.