It used to be so simple. Back in the day trust lawyers had to contend with only three possible players: settlors, trustees, and beneficiaries. Today that trio’s often joined by a new creature we’re still not exactly sure what to make of: a “trust protector” (which in Florida’s Trust Code is now referred to as a “trust director“).
But what exactly is a trust protector? The best definition I’ve come across is by estate planning attorney Philip Ruce, whose excellent article defines a trust protector as follows:
[A] trust protector is an individual (or committee or entity) who is not a trustee but who is nevertheless granted powers under the trust that supersede corresponding powers of the trustee. For practical purposes, a trust protector is generally a person selected by the settlor of a trust to represent the interests of the settlor in making decisions related to the trust that the settlor is unable to make, most often because the settlor is deceased. The idea behind the trust protector is to have a “living embodiment” of the settlor to represent the settlor’s interests, even after the settlor is gone. The trust protector is, at its core, an agent. No title is vested in the trust protector as title is with the trustee—the protector has instead been chosen by the settlor to have some level of power to guide the trustee’s actions.
Who decides trust ambiguity disputes? A court or the trust protector?
A use for trust protectors I find especially valuable is as a tool to privatize disputes involving how to interpret poorly drafted or ambiguous text in a trust agreement. Delegating this power to the settlor’s trust protector (most likely a trusted confidant) and away from a court (staffed by a judge with zero personal history with the settlor) is explicitly sanctioned by the 4th DCA (and now the 3d DCA, below). As readers of this blog know, I’m all for privatizing inheritance litigation whenever possible. That discussion usually focuses on mandatory arbitration clauses. But there’s another ADR tool we should all keep in mind that’s potentially even more powerful: a trust protector authorized to resolve disputes by simply amending the trust to make the problem go away.
Who decides who decides? Your trust protector or a judge?
If the settlor’s intent is to delegate all questions involving ambiguous or imperfectly drafted trust clauses to his trust protector and not a court, the trust agreement needs to clearly and unmistakably say that.
The closest analogy to this issue comes from the world of arbitration, where the question of who decides the “arbitrability” of a dispute has long been the subject of contention. In 2022 the Florida Supreme Court resolved that issue in Florida, holding that if parties incorporate the AAA rules into their arbitration clause, that’s clear and unmistakable evidence of the intent to remove such authority from the courts and delegate it, exclusively, to the arbitrators. The AAA rule the Florida Supreme Court focused on provides as follows: “The arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope, or validity of the arbitration agreement or to the arbitrability of any claim or counterclaim.”
Based on this guidance, if you want to make sure your client’s trust protector, not a court, decides when and if a dispute’s subject to resolution by the trust protector, including a clause that’s comparable to the AAA rule addressing the same issue is a must. The goal is to clearly and unmistakably evidence the settlor’s intent to remove such authority from the courts and delegate it, exclusively, to the trust protector. Here’s my version of what that clause might look like:
The trust protector, and not a court, shall have the exclusive power to rule on the trust protector’s own jurisdiction, including any objections with respect to the existence, scope, or validity of any power granted to the trust protector under this trust agreement or the existence of any ambiguity under this trust agreement or to the scope of the trust protector’s authority under this trust agreement to decide any claim or counterclaim. It is my express intent to remove such authority from the courts and delegate it, exclusively, to my trust protector.
The Lieberman v. Sloto case discussed below is a cautionary tale of what can go seriously wrong when your trust-protector clause doesn’t address the threshold question of who decides when and if a dispute’s subject to resolution by your trust protector.
Case Study
Lieberman v. Sloto, — So.3d —- 2025 WL 699625 (Fla. 3d DCA March 05, 2025)
This case involves a trust that owns a controlling interest in a company that operates a multi-million dollar commercial real estate company. The dispute arose after the trustee appointed the deceased settlor’s son as president of the trust’s real estate company. At the time the settlor’s son was appointed president, he was twenty-two years old, had graduated college approximately three months earlier, and had never held a paying job. The trust protector, who had known the settlor’s son since he was five years old, concluded this young man was not the right guy for the job, and directed the trustee to fire him. The trustee refused, and everyone ended up in court.
The issue before the trial court was whether a provision in the trust agreement stating that the trust protector “should make a reasonable inquiry” prior to exercising his authority to compel the firing of the settlor’s son was mandatory or discretionary. The trust protector said it wasn’t mandatory, especially in this case, where he had known the settlor’s son since he was five years old. Going through some kind of “reasonable inquiry” exercise now wasn’t going to tell him anything he didn’t already know. And just to remove any doubt, the trust protector exercised his amendment authority under another provision of the trust agreement to “correct ambiguities that might otherwise require construction or reformation by a trial court,” by amending the trust to clarify that the word “should” isn’t mandatory, it’s “permissive.”
Sounds like a straightforward trust-interpretation case, right? Wrong!
The trial court ruled that the word “should” as used in the trust agreement isn’t ambiguous, so the trust protector didn’t have the authority to resolve the dispute or amend the trust agreement to make the dispute go away. In other words, the trial court ruled that the court — not the trust protector — gets to decide “who decides” the trust-interpretation dispute before it. And the court ruled it’s the decider.
From there, things went downhill fast. The trial court then ruled that the trust protector’s interpretation of the word “should” was so lacking in merit that he — and his attorney — both deserved to be personally sanctioned per F.S. 57.105. Result: not only did the settlor’s trust protector lose the legal argument, he and his attorney were ordered to pay the other side’s legal fees.
No matter how right you are on the facts and the law, the chances of winning an appeal are always slim (think 20-30%). So appealing the court’s sanctions order in this case must have been a gut wrenching affair. Fortunately, the 3d DCA reversed the sanctions order, basically holding that the trust protector and his attorney were right all along. So saith the 3d DCA:
Accordingly, the word “should” is either 1) unambiguously advisory rather than mandatory, or 2) it is ambiguous. Therefore, it was error for the trial court to conclude that “should” in section 4.12 unambiguously means “shall.” Because “should” is, at a minimum, ambiguous, the Trust Protector had the sole authority pursuant to the Trust to interpret or clarify the meaning of the word “should.” Resolving the ambiguity as Lieberman did with the amendment defining “should” in section 4.12 to mean non-mandatory comports with the intent of the settlor. Thus, 57.105 fees were not warranted here, and the trial court abused its discretion in awarding them to Sloto.
Something went seriously wrong here
There are all sorts of reasons for why lawyers suffer from high rates of substance abuse and depression, as well as suicide. But litigation can be especially challenging. In a blog post entitled Reflections about Lawyering during National Stress Awareness Month, clinical-law professor (and former private-practice litigator) Danielle Hamilton observed:
As I’ve been thinking about stress, both its causes and cures, it occurred to me that “zealous advocacy” in practice really means “arguing a lot.” As lawyers, in order to advocate zealously on behalf of our clients, we do a lot of arguing, especially if we’re litigators. … Lawyers strive to make arguing as civil and respectable as possible, but that doesn’t make it any less unpleasant. To sum it up succinctly, consider this analogy from Tina Willis, a personal injury lawyer: “Other than professional boxing, I can’t think of any other profession where the job requires constant fighting.”
We can all agree that “arguing a lot” is part of the job and that it can be stressful under even the best of circumstances. But there need to be certain lines that aren’t crossed. The Lieberman v. Sloto case is an example of a line being crossed. No one should face the risk of 57.105 sanctions, with all of the economic and reputational damage that kind of ruling entails, just for doing your job litigating whether the word “should” is mandatory or permissive. The next time someone asks you what could possibly go wrong in their simple trust case, give them a copy of the Lieberman v. Sloto sanctions opinion.