Trust Protectors, Agency Costs, and Fiduciary Duty

First used in conjunction with offshore trusts, trust protectors have begun to appear in domestic trusts as well. In part, the protector appears designed to reduce agency cost problems associated with the trust form. But the emergence of trust protectors raises a new set of agency cost problems: first, do protectors owe any enforceable duties to the trust beneficiaries, or to anyone else; second, how, if at all, do the powers conferred on the trust protector affect the responsibilities of the trustee? Current doctrine has not yet answered these questions. And the answers may differ depending on the purposes for which the protector was appointed and the powers the settlor has conferred on the protector. This article attempts to situate the trust protector in the web of relationships that surround the private express trust, exploring the agency costs avoided and created with the advent of trust protector, and examining the ramifications for fiduciary duty law.