Trust Protector in Florida

A trust protector is an individual or entity named in a trust agreement with authority to oversee, direct, or modify certain trust functions. Florida law recognizes trust protectors under the Florida Uniform Directed Trust Act, codified in Florida Statutes § 736.0808. Appointing a trust protector is optional, but for asset protection trusts, the role provides critical flexibility that can strengthen the trust’s creditor protection over time.

What a Trust Protector Does

A trust protector occupies a position distinct from the trustee and the beneficiaries. The trustee holds legal title to trust assets, administers the trust, and makes distribution decisions. The trust protector holds supervisory and directive powers defined by the trust agreement itself. The protector does not manage trust assets on a day-to-day basis and does not hold title to trust property.

The trust agreement determines exactly which powers the protector holds. Florida law does not impose a fixed set of trust protector powers. Instead, the settlor grants specific powers when drafting the trust document. The protector’s authority can be as narrow as approving trustee changes or as broad as amending distribution provisions and changing the trust’s governing law.

Powers That Strengthen Asset Protection

Certain trust protector powers directly enhance a trust’s creditor protection. The most significant powers from an asset protection perspective include the following.

Removing and Replacing Trustees

The power to remove a trustee and appoint a replacement is the most common trust protector power. For asset protection purposes, this power serves as a safeguard against a trustee who fails to exercise discretion properly, cooperates with a creditor, or becomes subject to a court order in the trustee’s own jurisdiction.

If a domestic trustee receives a court order directing them to distribute trust assets to a beneficiary’s creditor, the trust protector can remove that trustee and appoint a replacement trustee in a different jurisdiction. In an offshore trust context, the trust protector’s ability to replace a trustee located in one foreign jurisdiction with a trustee in another foreign jurisdiction adds an additional layer of protection against creditor pursuit.

Changing Trust Situs and Governing Law

A trust protector with authority to change the trust’s situs and governing law can move the trust from a jurisdiction with weaker creditor protection to one with stronger protections. If Florida law changes in a way that weakens spendthrift or discretionary distribution protections, the trust protector can change the governing law to a state with more favorable statutes.

For long-duration trusts like dynasty trusts, this power is particularly valuable. A trust that may endure for centuries cannot rely on the assumption that any single jurisdiction’s laws will remain favorable throughout its existence. The ability to migrate the trust to the most protective jurisdiction available at any given time is one of the most powerful asset protection features a trust can incorporate.

Directing or Vetoing Distributions

A trust protector authorized to veto distributions can prevent the trustee from making a distribution that would immediately expose funds to a beneficiary’s creditors. If a beneficiary is facing active litigation, the trust protector can block distributions until the creditor threat resolves.

Conversely, some trust agreements grant the protector authority to direct distributions. In a family irrevocable trust where the settlor is not a beneficiary, the trust protector may hold the power to add the settlor as a beneficiary and direct distributions when doing so is appropriate. The timing of exercising this power matters for asset protection because adding the settlor as a beneficiary converts the trust into a self-settled trust under § 736.0505(1)(b), which exposes the trust to the settlor’s creditors.

Adding or Removing Beneficiaries

The power to add or remove beneficiaries allows the trust protector to respond to changes in family circumstances and creditor exposure. Removing a beneficiary who is under active creditor attack can eliminate the creditor’s path to the trust entirely, since a person who is not a beneficiary has no interest in the trust that a creditor could pursue.

Adding a beneficiary who was not originally named in the trust allows the trust to accommodate family changes (births, marriages, new dependents) without judicial modification. From an asset protection standpoint, the power to add beneficiaries must be exercised carefully. Adding the settlor as a beneficiary, as noted above, creates a self-settled trust problem.

Decanting Authority

Florida Statutes § 736.04117 authorizes trust decanting, which allows a trustee to distribute trust assets from an existing irrevocable trust into a new trust with different terms. When the trust protector holds or directs decanting authority, the protector can initiate a restructuring of the trust to strengthen its asset protection features.

Decanting can convert a support trust (where the trustee must distribute funds for the beneficiary’s health, education, maintenance, and support) into a purely discretionary trust (where the trustee has complete discretion over whether to distribute at all). A purely discretionary trust provides stronger creditor protection under § 736.0504(2) because creditors cannot compel distributions the trustee is not required to make.

Decanting can also move the trust into a new trust governed by a different state’s law, add or modify spendthrift provisions, restructure sub-trusts for different beneficiary lines, or update administrative provisions that no longer serve the trust’s protective purposes.

Amending Trust Terms

Some trust agreements grant the protector authority to amend specific trust provisions. Amendment authority is typically limited to administrative and tax-related provisions rather than dispositive provisions that determine who receives trust benefits. The limitation preserves the settlor’s core intent while allowing the trust to adapt to legal changes.

For asset protection, amendment authority allows the trust protector to update spendthrift language to comply with new statutory requirements, modify distribution standards to strengthen discretionary protections, or add provisions addressing new creditor remedies that did not exist when the trust was originally drafted.

Fiduciary Duty

Florida Statutes § 736.0808 provides that a trust director (including a trust protector) is presumptively a fiduciary. The trust protector owes duties to the trust beneficiaries when exercising the powers granted by the trust agreement. A protector who exercises powers in bad faith or in a manner harmful to the beneficiaries can be held liable for breach of fiduciary duty.

The trust agreement can modify the default fiduciary standard. Some trust agreements specify that the trust protector acts in a non-fiduciary capacity, particularly when the protector holds powers like adding or removing beneficiaries that are more personal than administrative. Whether a court would enforce a non-fiduciary designation in all circumstances remains an open question under Florida law.

The fiduciary designation has asset protection implications. A trust protector acting in a fiduciary capacity must exercise powers in the best interests of all beneficiaries, not at the direction of the settlor or any single beneficiary. This independence strengthens the argument that the trust protector’s decisions are genuine exercises of fiduciary judgment rather than actions controlled by the settlor, which helps defend against alter ego or nominee challenges to the trust.

Who Should Serve as Trust Protector

The trust protector should be someone other than the settlor, the trustee, or a current beneficiary. Appointing the settlor as trust protector undermines asset protection because it suggests the settlor retains control over the trust despite its irrevocable nature. Appointing a current beneficiary creates conflicts of interest between the beneficiary’s personal interests and the protector’s fiduciary duties.

Attorneys, CPAs, and other trusted advisors are common choices. A professional trust protector brings legal and financial expertise to the role and operates independently of the family dynamics that can complicate trust administration. The professional’s independence also reinforces the trust’s credibility if a creditor challenges the trust’s legitimacy.

For offshore trusts, the trust protector is often located in a different jurisdiction than the trustee. If the trustee is in the Cook Islands, the trust protector might be a U.S.-based attorney. This geographic separation ensures that no single jurisdiction’s courts can simultaneously reach both the trustee and the protector, providing an additional layer of structural protection.

The trust agreement should include succession provisions for the trust protector role. A trust that outlives its original protector without a designated successor may lose the flexibility the protector was intended to provide. Succession provisions typically authorize the current protector to appoint a successor, or designate a method for beneficiaries to select a new protector.

Trust Protector vs. Trustee

The trustee manages trust property, makes investment decisions, handles tax filings, and distributes income and principal according to the trust’s terms. The trust protector supervises, directs, or constrains the trustee’s actions in specific areas defined by the trust agreement.

Function	Trustee	Trust Protector
Holds legal title to trust assets	Yes	No
Makes day-to-day investment decisions	Yes	Only if granted directive power
Distributes income and principal	Yes	May veto or direct distributions
Removes and replaces other fiduciaries	Typically no	Yes, if granted
Changes trust situs or governing law	Typically no	Yes, if granted
Amends trust terms	Limited (decanting)	Yes, if granted
Required for every trust	Yes	No

The division of authority between trustee and protector creates a system of checks and balances. The trustee cannot act unilaterally in areas where the protector holds directive or veto power, and the protector cannot manage trust assets without the trustee’s operational role. For asset protection trusts under Florida law, this separation of functions makes it more difficult for a creditor to argue that any single person controls the trust.