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The protector (Powers of the protector (The usual powers fall into three…
The protector
Powers of the protector
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If the protector is seen in effect to be exercising all of the power of the trustee and that in reality the trustee is merely following the protector's instructions, there is a real possibility that the protector will be treated as the trustee and this could attract adverse fiscal penalties in the protector's home tax jurisdiction
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The powers conferred on the protector can be wide and varied, they are usually stated in the trust deed or by a separate deed of appointment
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If a protector has been granted powers in the trust deed they should consider from time to time whether to exercise any of their powers, make a proper survey and review of the actual objectives of the trust and/or consider the appropriateness of any exercise of their powers
The settlor should have full confidence in the persons whom they are appointing as the initial trustee of their trust however there may be an element of uncertainty in the settlor's mind when the benefit of person acquaintance is lacking
Settlor's may therefore wish to appoint a protector who the trustees must liaise with or seek consent from when exercising some of their powers
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A protector can fulfil a role between the beneficiaries (not the settlor) and the trustee, not just for terms of communication of wishes, but more for providing an element of safeguard of the trustees' discretionary powers
The powers given to a protector could be retained by the settlor themselves but for personal or tax reasons it is often preferred that the settlor's involvement with the trust is reduced to a minimum particularly when the settlor's control may be argued
The role of the protector is to oversee the actions of the trustee for the benefit of all beneficiaries