Trust Protectors in New York: Power, Oversight, and Litigation Risk in High-Value Trusts

For New York families and business owners with substantial wealth, modern trusts increasingly rely on a role called the trust protector. The title sounds reassuring. In practice, it can be one of the most misunderstood—and litigated—positions in sophisticated trust structures.

This post explains what a trust protector is, how the role differs from a trustee, whether a trust protector can be removed, and whether trust protectors can be pulled into litigation and discovery, all through a New York-specific lens.

What Is a Trust Protector?

A trust protector is a third party named in a trust instrument and granted specific, enumerated powers that are not typically exercised by a trustee, settlor, or beneficiary.

Importantly:

There is no inherent legal meaning to the title “trust protector.”
A trust protector does not automatically “protect” the trust.
The role exists only to the extent created and defined by the trust document itself.

Trust protectors are most often used in high-value, long-term trusts to provide flexibility, oversight, or control where traditional trustee powers are either too rigid or too conflicted.

New York’s Starting Point: No Trust Protector Statute

Unlike many jurisdictions, New York has no statute that defines, regulates, or standardizes trust protectors.

That absence has consequences:

There is no default rule in New York stating whether a trust protector is a fiduciary or non-fiduciary.
There is no statutory safe harbor insulating trust protectors from liability.
Courts look almost entirely to:
The trust instrument itself, and
General fiduciary and equity principles developed through case law

In New York, trust protectors operate in a document-driven, case-by-case legal environment, which increases both flexibility and litigation risk.

Trust Protector vs. Trustee: Oversight vs. Operation

The Trustee: The Operator

A trustee is responsible for the day-to-day administration of the trust. Trustees typically:

Control and invest trust assets
Make discretionary distributions
Administer business interests held in trust
Owe continuous fiduciary duties
Are routinely subject to accountings and court oversight

Trustees are almost always fiduciaries under New York law.

The Trust Protector: The Strategic Overseer

A trust protector, by contrast:

Does not manage assets or make routine distributions
Acts episodically, not continuously
Exercises power only when specific triggers arise
Often exists to check trustee power or adapt the trust to change

Common trust protector powers include:

Removing and replacing trustees
Changing governing law or trust situs
Modifying administrative provisions
Approving or vetoing significant decisions
Granting or revoking powers of appointment

This distinction becomes critical once disputes arise.

Trust Protectors vs. Trust Advisors: A Subtle but Important Difference

Modern trust drafting often blurs two concepts:

Trust advisors typically exercise traditional trustee-like powers, such as directing investments or distributions. Because they control core trust functions, they are often treated as fiduciaries.
Trust protectors are more commonly assigned non-administrative, structural, or strategic powers, and trust instruments frequently attempt to label these powers as non-fiduciary.

In New York, courts do not rely on labels. They examine what powers are actually exercised, not what the role is called.

Is a Trust Protector a Fiduciary in New York?

There is no automatic answer.

Nationally, three competing approaches exist:

Non-fiduciary by default, to encourage service and reduce liability exposure
Fiduciary by default, because significant power should carry accountability
Power-by-power analysis, where fiduciary status depends on the nature of each granted power

Because New York has no statute, courts are more likely to apply the third approach.

A trust protector who:

Controls trustee selection
Alters beneficiary interests
Influences business governance
Exercises veto power over trustee decisions

May be treated very differently from one with purely ministerial or advisory authority.

“Personal Powers” and the Litigation Trap

Trust instruments often attempt to characterize trust protector powers as “personal” or non-fiduciary.

Even so, those powers are not unlimited.

A trust protector—fiduciary or not—may not exercise authority in a way that:

Contradicts the settlor’s intent
Constitutes a “fraud on the power”
Redirects trust benefits for improper purposes

In New York litigation, this is where many trust protector disputes arise: not from blatant misconduct, but from contested motive, scope, or alignment with settlor intent.

Can a Trust Protector Be Removed in New York?

Often, yes—but only if the trust instrument or equitable principles allow it.

Removal depends on:

The trust document

Well-drafted trusts expressly provide mechanisms for removing and replacing trust protectors. Poorly drafted trusts often do not.

The scope of authority exercised

The more power a trust protector holds over assets, trustees, or beneficiaries, the more likely court oversight becomes appropriate.

Allegations of abuse, conflict, or dysfunction

Courts are far more receptive to intervention where trust administration or beneficiary rights are at risk.

In high-asset disputes, removal of a trust protector is frequently sought alongside trustee removal—especially where control over business interests or distributions is involved.

Can a Trust Protector Be Sued or Be Subject to Discovery?

Yes—and this surprises many families.

Even in New York, where trust protectors are not statutorily defined:

Trust protectors can be named as parties in litigation
Their communications may be discoverable
Their decisions may be scrutinized under fiduciary-like standards

Courts focus on function, influence, and impact, not titles.

Where a trust protector’s actions affect trustee selection, business control, distributions, or beneficiary rights, litigation exposure follows.

Why Trust Protectors Matter in High-Value New York Disputes

Trust protector disputes commonly arise in cases involving:

Closely held businesses owned in trust
Second marriages and blended families
Dynasty trusts spanning generations
Control over voting interests or management rights
Conflicts between income and remainder beneficiaries

In these cases, the trust protector often becomes the pivot point of control—and, inevitably, a litigation target.

Strategic Takeaway for New York Business Owners and Families

In New York, a trust protector can be a powerful planning tool—or a structural vulnerability. Because there is no statutory framework, everything depends on drafting, conduct, and context. The same authority that allows a trust protector to stabilize a trust can expose them to litigation if relationships deteriorate or asset values rise.

When substantial wealth, business equity, or family control is at stake, trust protector disputes are not academic. They are control disputes, and they require litigation counsel who understands both fiduciary law and high-stakes asset dynamics.

With offices in Albany, Buffalo, Rochester, New York City, we can help you across New York State.  

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This blog post is for informational purposes only and does not constitute legal advice. For specific legal counsel, please contact our office directly. 