¶ 1301
Overview
The question. A trust protector holds powers over a trust without holding the trust property. The powers may be few (a power to remove and replace the trustee) or many (powers to consent to distributions, to add and exclude beneficiaries, to amend administrative and dispositive terms, to change the governing law and to appoint a successor). Chapter 11 traced the office from its offshore origins to its recognition in the American statutes, and chapter 12 catalogued the powers. This chapter asks the question that both chapters left open: when a protector exercises, or declines to exercise, a power, is the protector acting as a fiduciary? If so, to whom are the duties owed, what do they require? How far may the instrument relax them? See supra chs. 11, 12.
Why the answer matters. The characterization of a protector's powers decides at least six practical questions. It decides whether a beneficiary may sue the protector for a loss, and on what standard. It decides whether a court may remove the protector, since the courts that have removed protectors have rested the jurisdiction on the fiduciary character of the office. It decides whether the protector may exercise a power to serve the protector's own interests or those of the settlor. It decides what the protector must do when the protector's own interests conflict with the trust. It bears on the tax treatment of the trust, because several Internal Revenue Code provisions turn on whether a power is held in a fiduciary or nonfiduciary capacity. And it bears on creditor protection, because a court that finds that a settlor-protector holds personal powers broad enough to control the property may treat the property as the settlor's own. See infra ¶¶ 1380.05–1380.07; see supra ch. 3.
The answer in outline. No single answer covers every jurisdiction. The Uniform Trust Code presumes that a nonbeneficiary who holds a power to direct is a fiduciary. The Uniform Directed Trust Act goes further and imposes on a trust director the duty of a trustee in a like position. Delaware, Nevada and Wyoming treat protectors as fiduciaries unless the instrument provides otherwise, or to the extent of the powers conferred. South Dakota and Alaska adopt the opposite default and treat a protector as a nonfiduciary unless the instrument provides otherwise. Offshore, Belize and Nevis impose fiduciary duties subject to the terms of the trust, while the Cook Islands statute provides that a protector is not liable or accountable as a fiduciary, again subject to the instrument. The cases, which come mainly from Jersey, Bermuda, the Isle of Man and the Cayman Islands, treat the question as one of construction of the particular deed, power by power, and have generally found the powers of an office called protector to be fiduciary. In March 2026 the Privy Council held that fiduciary protectors whose consent is required for a trustee's decision may withhold consent on the merits, by reference to their own judgment of the beneficiaries' interests. See infra ¶ 1360.
The choice belongs to the settlor. Every statute examined in this chapter allows the instrument to choose. A settlor may make the protector a fiduciary in a jurisdiction whose default is nonfiduciary, or relieve the protector of fiduciary duties in a jurisdiction whose default is fiduciary, within limits that differ among the statutes. The drafter's task is therefore to decide, power by power, which character each power should have, and to say so in terms. Most of the litigation reported in this chapter arose because an instrument said too little. See infra ¶ 1390.
Terminology. This chapter uses "protector" for a person, other than a trustee, who holds powers over a trust under its terms, whatever the instrument calls the office. The Uniform Directed Trust Act calls that person a trust director; Delaware calls the person an adviser and treats a protector as one kind of adviser; South Dakota, Nevada and Wyoming distinguish protectors from advisers by the kind of power held. Where a statute's own term matters, the chapter uses it. The Privy Council has observed that the word "protector" "has yet to acquire the status of a term of art recognised by the law as the badge for the conferral of any particular role." A v. C [2026] UKPC 11 [117]. The label settles nothing.
Plan of the chapter. Paragraph 1310 sets out the classification of powers as beneficial, limited or fiduciary on which the offshore cases rely. Paragraph 1320 examines the American statutory defaults, with Table 13-1, and paragraph 1330 the offshore statutes. Paragraph 1340 discusses the cases on fiduciary status, including the McLean litigation in Missouri and Van Rooyen in Jersey. Paragraph 1350 states what duties a fiduciary protector owes, and paragraph 1360 examines the consent power, with Piedmont and the Privy Council's decision in the X Trusts case. Paragraphs 1370 and 1380 treat exculpation and indemnity, and compensation, conflicts and the choice of protector. Paragraph 1390 closes with drafting, model provisions and a checklist in Table 13-2.