How a Trust Protector Is Paid

Trust protector fees are one of the least standardised costs of a family trust. The protector is an optional office, and the people who fill it range from a close relative who accepts no payment to a professional adviser who charges for time. If you are asking how much a trust protector gets paid, the honest starting point is that the answer depends on who the protector is, what the deed asks of them and how often they are expected to act.

This page explains the pay arrangements you are likely to meet, who ends up bearing the cost, and what to write down so that nobody is surprised later. It gives general information, not advice on your own structure. For the role itself, see Trust Protector in Mauritius.

Does the law set trust protector fees?

The protector is recognised in section 24 of the Trusts Act 2001. The provision allows the deed to provide for a protector, who may be an adult (including the settlor) or a body corporate, and whose task is to advise the trustee. Unless the deed says otherwise, the protector may remove and appoint trustees, fix the governing law of the trust, change the place of administration and withhold consent to certain acts. Holding that office does not make the protector a trustee.

The provisions summarised here describe the office and its powers. They do not lay down a scale of fees for protectors, and there is no published tariff you can look up. Remuneration is therefore a matter of agreement: it is set in the trust deed, in a separate engagement letter, or by a decision of the trustee within whatever power the deed gives it.

That freedom has a practical consequence. Whatever is agreed should be written, because a protector's entitlement to be paid, and the trust's ability to pay, rest on the documents rather than on a statutory rule. See what a trust deed contains for the clauses that usually carry this.

Typical remuneration models

In practice, protector pay falls into a handful of patterns. They are not mutually exclusive, and many deeds combine them.

Unpaid, with expenses reimbursed

When the protector is a family member, a long-standing friend or a trusted adviser acting out of loyalty, the office is often unpaid. The deed then usually allows the trustee to reimburse reasonable out-of-pocket costs, such as travel or the cost of taking independent advice.

This is simple and cheap, but it has a weakness. An unpaid protector has little incentive to review accounts carefully, and may become reluctant to act when a difficult decision arrives. It also raises the question of what happens if that person loses interest or moves abroad.

A fixed annual fee

A fixed yearly fee suits a protector who is expected to be available and to monitor the trust, even in years when nothing happens. The amount is agreed in advance and does not depend on how much work is done.

The advantage is predictability for the trust. The risk is that the fee does not match the workload in a busy year, which can lead to a dispute or to a protector who is under-compensated precisely when a major decision is needed.

Hourly or time-based charges

A professional protector may charge for the time actually spent: reviewing trustee accounts, considering a request for consent, or taking part in a decision to replace a trustee. This is the fairest match between work and pay, and it is the model most often used where the protector is a lawyer, accountant or specialist adviser.

Its drawback is that costs are harder to forecast. Families usually deal with this by asking for a cap, by requiring prior approval above a certain level of spend, or by asking for periodic statements of time.

Event-based fees

Some arrangements pay a set amount for a particular event rather than an annual retainer: for example, a fee when the protector is asked to consent to a distribution, to approve a change of trustee, or to deal with a change of governing law. This keeps routine years cheap and rewards work where it arises.

A corporate protector

Section 24 allows a body corporate to act as protector. A corporate protector, which may be a family-owned company or a professional entity, will normally invoice on terms of its own. This can help with continuity, since the office does not depend on one individual's health or availability, but it adds a layer of cost and of governance that should be weighed against the benefit. It also raises the question of who controls the company, which is relevant to the independence the protector is meant to bring.

Comparison of the main models

None of these is the correct answer for every family. The right model follows from what the protector is actually meant to do, which you can test against the powers of a trust protector.

Who bears the cost?

The default position in most trusts is that the protector is paid out of the trust fund, as an expense of administration. The trustee settles the invoice from trust assets, and the cost is therefore borne, in economic terms, by the beneficiaries, because it reduces the fund that will eventually be distributed.

There are three common variations.

• Paid by the trust. The deed authorises the trustee to pay the protector's remuneration and expenses from the trust fund. This is the usual rule and the cleanest to administer.
• Paid by the settlor personally. The settlor, or a family company, pays the protector directly during the settlor's lifetime. This keeps the cost off the trust fund, but it can blur the line between the settlor and the protector and should be handled with care. It is best discussed with an adviser, particularly where independence matters.
• Paid by a beneficiary or a class of them. Rare, and generally unsuitable, because it ties the protector's income to one person's interests.

Whichever route is chosen, the deed should say clearly who pays and from which source. A protector whose fees depend on the goodwill of the trustee, whom the protector may need to supervise or even replace, is in an awkward position. Having the entitlement written into the deed avoids that conflict.

Separate from trustee fees

Protector pay should not be confused with the trustee's charges. In Mauritius a trust must have at least one qualified trustee, and that trustee is remunerated for administering the trust. Section 2 of the Trusts Act 2001 defines a qualified trustee as an FSC-licensed corporate service provider (Management Licence) or another Mauritius-resident person authorised by the FSC to provide trustee services. Those fees belong to a different budget and are covered by the trustee's terms of business, not by the protector's arrangement.

Two points follow.

• A protector is not a trustee. Even where a protector is paid well, the role does not carry the trustee's statutory and fiduciary duties, and a payment to the protector should not be dressed up as a trustee fee.
• It is worth being explicit about what the protector is paid for. If the protector is expected to attend meetings, review accounts or sign consents, the engagement should list those tasks, so that routine trustee work is not paid for twice.

For a comparison of the two offices, see protector versus trustee. A protector should also be distinguished from an enforcer, who exists in a purpose trust; see enforcer versus protector.

Paying a settlor who acts as protector

A settlor may be appointed protector under section 24, and section 8 of the Trusts Act 2001 confirms that the settlor may also hold other roles, though the settlor cannot be the sole beneficiary of the trust they created. Where the settlor is the protector, the question of payment becomes delicate.

Paying the settlor out of the trust fund for acting as protector can sit uneasily with the idea that the trust holds property that no longer belongs to the settlor. It may also be read as evidence of continuing control. Most families in this position choose no remuneration, with expense reimbursement only. The wider issue is covered in can the settlor be the protector. Because tax and legal consequences depend on the facts and on the settlor's country of residence, take advice before putting any payment to a settlor in the deed.

Cost drivers to expect

Even without a published scale, several factors tend to raise or lower what a protector charges.

• Seniority and profession. A specialist lawyer will charge differently from a family friend.
• Scope of powers. A protector who holds the power to remove trustees or to veto distributions carries more responsibility than one who is merely consulted.
• Complexity of assets. Operating businesses, property and cross-border holdings take longer to review than a simple portfolio.
• Number of beneficiaries and jurisdictions. More people and more countries mean more questions and more consents.
• Reporting expectations. A protector who receives regular accounts and a copy of key documents needs time to read them.
• Liability. Some protectors ask for an indemnity from the trust or for insurance, and that has a cost. The deed should state whether such protection is available.

Compliance work adds to the burden. Information on protectors forms part of the beneficial ownership picture that qualified trustees must hold under Mauritian anti-money-laundering rules, and the FSC's trust register contains the identity of protectors. A protector must therefore be ready to supply identification and to have their details recorded. Details are treated as confidential under the Act, subject to the limited exceptions it provides; see trust confidentiality.

Writing the arrangement down

Disputes about protector pay usually arise because nothing was documented. A short checklist helps.

• State whether the protector is paid, and if so by what method
• State who pays and from which source
• Say whether expenses are reimbursed and what counts as reasonable
• Set any cap or require approval above a stated level of spend
• Describe the tasks covered by the remuneration
• Say what happens to the fee if the protector steps down or is removed
• Decide whether the protector may take independent advice at the trust's cost
• Record whether the protector has an indemnity and its limits
• Review the arrangement from time to time, for instance as part of the annual trust review

The review step matters. A fee that was reasonable when the trust was small may no longer fit when its assets and complexity have grown.

Choosing a model: a short decision guide

If you are still deciding whether the office is needed at all, read do you need a trust protector. And if the current protector is to be changed, replacing a trust protector covers the mechanics, including the effect on any agreed fee.

Questions to put to a prospective protector

Before accepting, a protector should be willing to answer, and a family should ask:

1. What exactly will you do each year, and what will you do only on request?
2. How will you charge, and will you give an estimate or a cap?
3. How are conflicts of interest handled if you also advise the family or the trustee?
4. Will you accept an exclusion or limitation of liability, and on what terms?
5. What happens to your appointment and your fees if you become unable to act?

The answers shape the clauses that follow, and a reluctance to answer is itself informative. To discuss your situation with a licensed provider, you can use the form at our contact page.