This is a fair point. The potential problem with this approach is the beneficiary has to know enough about investing to know when they should call upon (appoint) a trust protector to review the investments. If your beneficiaries are not investment savvy, then this is not so straightforward.FIREchief wrote:...You seem to be assuming that the trust protector role is always "staffed." There are options for allowing the beneficiaries to appoint and remove a trust protector as needed/desired. (I am not a lawyer) If index funds continue to be the superior equity investment for the next forty years (as they have been for the last forty years,) then there may never be a need to hire/pay a trust protector. If the world changes radically, then as somebody else pointed out the trust protector (nuclear) option can be invoked to the extent and duration needed. There are many other good reasons (besides modification of investment directions) for a trust to allow for a trust protector to be appointed.
Unfortunately, this is my reality. DW is simply not interested in (knowledgable about) investing. As long as the CC's are paid and she has $ in her wallet she is a happy camper. I own a lot of this as I have managed our finances since day one. So her deciding when to call upon a trust protector would be a challenge. And then understanding the case made by each side, that would be another challenge. Once she is gone and the assets pass to our two adult daughters, things might be different. However, neither of them are investment savvy either at the present time. Maybe that changes over time, but maybe not.
I am not saying the use of a trust protector is a bad idea at all. It is just not the easy solution (in every case) you make it out to be.
This approach is not without its issues - as has been well covered by afan in this thread.FIREchief wrote:If a trust clearly directs an independent trustee to invest only in passively managed index funds, perhaps with specific mention of valid examples, then there is absolutely no need for "asset management." Just do what the trust says!