Friday, December 6, 2013
Trust protectors serve to look out for a trust by having the power to fire a trustee. This idea can also be applied to Limited Liability Companies and Limited Partnerships by drafting a provision into the Operating or Partnership Agreement.
A “Steering Committee” provison in an LLC Operating Agreement will serve the same role as the Protector in a Trust. This Steering Committee would be comprised of trusted people that the Members of the LLC agree upon. The one power of these trusted individuals would be the ability to fire Managers. Having a committee that Members agree upon would hopefully avoid the strife that arises when Members have to vote out a Manager. And if the LLC wants to attract investors, the presence of a Steering Committee may add a degree of safety.
See Jay Adkisson, The Trust Protector Idea Isn’t Just for Trusts, Forbes, Nov. 21, 2013.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.