Family Wealth: — Keeping It in the Family — How Family Members and Their Advisers Preserve Human, Intellectual, and Financial Assets for Generations, Revised and Expanded Edition

Chapter 8. Protectors, Advisers, Mentors, and Hommes d'Affaires

This chapter is dedicated to John O'Neil, mentor of mentors.

In this chapter I will discuss the nature and roles of protectors, advisers, mentors,^[13] and hommes d'affaires, and how each is helpful in the implementation of a family governance plan.

Protectors

What is a protector, and what role does he or she play in family governance? The legal concept we know as protector originated with trusts drafted principally by counsel in the United Kingdom. Today this concept is used extensively in the United States to solve two serious trust governance problems.

A protector can fill the need for an impartial person who will never have any interest in the income or principal of a trust but has the authority to consent to certain requests by the beneficiary. Frequently, when younger members of families inherit substantial assets, they are unprepared for the responsibility of full control over their financial affairs. This problem occurs most often with distributions to young family members upon the termination of Uniform Gift to Minors Accounts at age eighteen or twenty-one and when trusts terminate and distribute substantial sums. The problem also occurs with the marriages of younger generation family members when gifts are made to help the newlyweds get started, but the donor family wants to preserve these assets for its family member should the marriage fail. In each of these situations, counsel frequently recommends the creation ...