The Role of a Trust Protector

‍ 1. What is a Protector?

‍ The office of the trust protector has become a cornerstone of modern offshore trust drafting, despite being a mechanism rarely seen in New Zealand domestic trusts. 

Emerging prominently in the mid-to-late 1980s, the protector role was designed to resolve a fundamental tension in offshore wealth management: settlors wished to alienate their assets for tax, confidentiality, and asset protection reasons by using distant, offshore corporate trustees, but were reluctant to hand over absolute discretionary control to strangers.  

By appointing a protector, settlors introduced a vital safeguard to ensure the trust was administered in harmony with the settlor’s expectations.[1]

Although several offshore jurisdictions and some US states now have their own statutory definitions,[2] there is no single legal definition of a protector.[3]  The role is as broad or as narrow, and carries as many or as few powers, as the trust deed prescribes.  

1.1 Purpose of the Role

Where a trust includes a protector, the protector’s powers may be positive (for example, a power to direct the trustees to make a distribution) or negative (a power of veto over specified trustee actions).

Frequently, the consent of the protector is required before the trustees may exercise key powers such as distributing income or capital, or appointing or removing beneficiaries.  In this way the protector provides an independent check on the trustees’ exercise of their discretionary powers.

2. Whether a Protector’s Powers are Fiduciary or Non-Fiduciary

A key consideration regarding protectors’ powers is the extent to which they owe fiduciary obligations. Unlike trustees — who are invariably fiduciaries — the position of a protector is far less settled. Whether a protector’s powers are fiduciary or personal in nature depends, in the first instance, on the terms of the trust instrument; but the cases have developed a body of principle that applies regardless of how those powers are labelled.

2.1 Kea Trust Company Limited v Pugachev

Kea Trust Company Limited v Pugachev,[4] provides useful guidance from a New Zealand perspective on the role of a protector and the extent of fiduciary obligations a protector can owe.  The core dispute in that case concerned whether a trustee had been validly removed by a protector.

The issue was whether the protector owed fiduciary obligations to the beneficiaries and whether the power of removal had been exercised for an improper purpose.

Heath J confirmed that the starting point is always the words of the trust instrument:[5]

The first port of call will always be the words of the relevant trust instrument, and the objects of the trust that can be gleaned from them and any relevant extrinsic evidence.

Importantly, Heath J also held that whether the protector is or is not labelled a fiduciary is unlikely to affect the duty cast upon the protector to exercise powers to promote the objects of the trust.[6]

2.2 JSC Mezhdunarodniy Promyshlenniy Bank v Pugachev

In JSC Mezhdunarodniy Promyshlenniy Bank v Pugachev,[7] Birss J identified the key distinction not as whether a power is labelled “fiduciary” but as whether it is one that can properly be exercised by the protector in a selfish way in his or her own favour, as against a power that can only properly be exercised for the purpose of furthering the interests of the discretionary beneficiaries as a class.

As Birss J observed, in a family trust context where the objective is to hold assets for the benefit of family members over an extended period, a protector who is neither a trustee nor the settlor nor a member of the class of beneficiaries may act in a genuinely independent fiduciary capacity — “a wise old aunt or uncle” whose role is to guard the guardians.[8]

2.3 The Privy Council Framework: A v C

The most recent and comprehensive examination of protector powers came in the Privy Council decision of A v C.[9]  The Board was asked to resolve what was presented as a binary question: whether the role of the protectors was limited to reviewing the lawfulness of the trustees’ proposed exercise of their powers (the Narrow Role) or whether the protectors were empowered to exercise an independent discretion by reference to their own view of the merits of the trustees’ proposals (the Wider Role).

‍ The Board rejected the binary framing as the wrong question.  Where a settlor has made provision for protectors to exercise precisely defined powers — including powers to approve or disapprove steps proposed by the trustees — but remained silent about how those powers should be exercised, the correct question is not which of two default roles was specified but rather:[10]

[W]hat if any constraints did the trust instrument actually impose, construed in its context and with regard to any constraints imported by the general law?

The Board reasoned that the imposition of a requirement that one party obtain the consent of another before acting places the consenting party under no constraint whatsoever — save perhaps good faith — in the exercise of what is in substance a power of veto.  The analogy drawn was with a landlord’s consent to assignment under a lease: a requirement not to withhold consent unreasonably may be imposed by statute or expressed in the instrument, but it is not inherent in the veto power or generally implied by law.[11]

2.4 Comparison of the Narrow vs Wider Protector Frameworks

‍Narrow Role

Core Functionality: Limited to reviewing the objective lawfulness of the trustees’ proposed initiatives or exercises of power.

Scope of Beneficiary Protection: Protects rights strictly against unlawful conduct, mismanagement, or procedural breaches by trustees.

Wider Role

Core Functionality: Empowered to execute independent discretion based purely on their own view of the merits of a proposal.

Scope of Beneficiary Protection: Protects beneficiaries and settlors from decisions that stray unacceptably far from baseline family expectations.

Key Principles Emerging from A v C

‍●     Scope of the Label: The label “protector” or “protectorate” does not shed useful light on the scope of the role.

‍●     Protection Limits: A Narrow Role protector may be said to protect beneficiaries’ rights from being harmed by unlawful conduct by the trustees; a Wider Role protector may be there to protect beneficiaries and the settlor from the exercise of powers which, however lawful, stray unacceptably far from the family’s expectations.

●     Role Origin: The fact that a protector role is introduced by a trustee rather than a settlor is not determinative as to construction.

‍●     Joint Governance: Where a trust’s purposes are to be achieved by trustees and protectors working together, it is blinkered to regard the beneficiaries’ rights as limited to those that flow from the lawful performance of the trustees alone.

‍●     Intention & Construction: The ambit of the protector’s role is determined by reference to accepted rules of construction.

‍●     Ambit: The precise delineation of the protectors’ powers of veto, coupled with the absence of any wider constraints upon their exercise, suggests that no wider constraints were imposed as a matter of construction. The constraints identified — fiduciary duties of loyalty, no-conflict, and proper purpose — though substantial, do not confine protectors to the Narrow Role.

‍●     Specific Structural Features Supporting the Wider Role:

‍ ‍○        First, a power permitting protectors to waive or permanently release their consent function entirely is inconsistent with a purely supervisory watchdog role.

‍ ‍○        Second, where multiple protectors cannot agree, the joint protectors clause allows the trustees to proceed but requires them to consult each protector and take their views into account — a mechanism that makes sense only if those views go to the merits, not merely to legality.

‍ ○        Third, consent is required only for particularly important decisions (capital appointments and specified securities dealings); if the Narrow Role were intended, one would expect it to apply across all trustee actions, since any breach of trust would be of equal concern to a settlor.

‍●     Rejection of Implied Terms: No implied term could impose the Narrow Role. It was not necessary to make the trusts workable, it would not satisfy the officious bystander test (as demonstrated by the divergence of judicial opinion in the case), and the word “protector” has not acquired the status of a term of art that imports any particular role by operation of law.

‍The Board concluded that the balance of factors “overwhelmingly favours the Wider Role”, allowed the appeal, and overturned the declarations made by the courts below.  A v C confirms that the question in every case is an orthodox one of construction.  Courts should ask what constraints, if any, the instrument actually imposes, read in context with the constraints imported by the general law — not which of two pre-defined roles a protector holds.

‍ 3. Disclosure and information rights

‍Whether protectors have any right to request information from trustees, settlors, or beneficiaries is an important consideration.  In part this can be addressed by the terms of the relevant trust.  However, there is little if any authority regarding the rights of protectors to obtain information from trustees.  This was considered in Davidson v Seelig[12]where as well as confirming the lack of authority, the court noted that this is an area where the law may be expected to develop.

‍ 4. Key Takeaways and Practice Points

‍●         Orthodox Construction Rules: Avoid relying on the mere word "Protector" to convey meaning. The courts will determine duties based entirely on specific clauses and context.

‍●         Explicitly Define the Scope: Draft deeds to clearly state whether a protector's duty is strictly to monitor legality (Narrow Role) or evaluate the overall baseline merits of actions (Wider Role).

‍●         Address Information Flow: Because the common law framework on protector disclosure rights remains unsettled, explicitly build information-sharing and document-access provisions directly into trust frameworks.

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This article was co-written with Vicki Ammundsen of VATL and first appeared in Law News on 19 June 2026.
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[1] Tsun Tey in “Trust Protector” (2008) 20 SAcLJ 99.

[2] Tey at [15] – [31].

[3] Tsun Tey in “Trust Protector” (2008) 20 SAcLJ 99 has suggested the following: “Trust protector can be defined as a person who, other than the trustee, is the holder of an office created by the terms of the trust, and is authorised or required to play a part in the administration of the trust.”

[4] Kea Trust Company Limited v Pugachev [2015] NZHC 2412.

[5] At [46].

[6] At [52].

[7] JSC Mezhdunarodniy Promyshlenniy Bank v Pugachev [2017] EWHC 2426 (Ch).

[8] At [181].

[9] A v C [2026] UKPC 11.

[10] At [83].

[11] At [84].

[12] [2016] EWHC 549.‍ ‍