Many Chinese and Asian families hold wealth in trusts set up in Jersey, the British Virgin Islands, Singapore or Hong Kong. Others have Australian family trusts. Often the deed gives a protector or appointor, usually a trusted relative, a family friend or the settlor himself, the power to approve or veto the trustee’s key decisions, including distributions.
That works well while everyone agrees. It becomes difficult when the protector refuses consent to a distribution the trustee wants to make, or uses the veto to push the trustee towards the protector’s preferred result. This article explains, in general terms, what a protector’s consent power is, its limits, and how families can resolve the disagreement without a long court fight.
A hypothetical example
Consider a discretionary trust governed by Singapore law, with a professional trustee in Singapore. The settlor has died, his long-time business friend is the protector, and capital distributions need the protector’s written consent. One of the settlor’s adult daughters lives in Melbourne and asks for funds to fit out a medical clinic. The trustee considers the request and proposes a distribution. The protector refuses. He points to a letter of wishes favouring capital preservation, but he also mentions that the daughter has stopped attending family meetings and has been critical of him.
Is the protector entitled to refuse? Must the trustee give up? That depends on the deed, the governing law and how the protector decided.
What is a protector’s consent power?
A protector is a person or company appointed under the trust deed to oversee the trustee. The deed may give the protector power to remove trustees, change the governing law, add or exclude beneficiaries, or consent to particular decisions. A consent power means the trustee cannot validly exercise the relevant power, such as distributing capital, without the protector’s agreement.
In Australian family trusts, the equivalent figure is usually called the appointor, principal or guardian. Some Australian deeds also require the appointor’s consent to distributions, variations or vesting.
Are protector powers fiduciary?
This matters because a fiduciary must act in good faith for the beneficiaries and for the purposes of the power, not for personal reasons.
Courts in offshore jurisdictions have increasingly treated protectors’ consent powers as fiduciary. In In the matter of the Piedmont Trust and the Riviera Trust [2021] JRC 248, the Royal Court of Jersey held that a protector owes fiduciary duties to the beneficiaries, must consider relevant matters and ignore irrelevant ones, and must reach its own decision rather than simply checking whether the trustee’s decision was rational. In March 2026, in A v C [2026] UKPC 11, an appeal from Bermuda, the Privy Council held that where the deed contains no express limit, a protector with a consent power may exercise its own independent judgment and withhold consent even to a trustee proposal that is lawful and rational. The Board treated the protectors as fiduciaries and said both sides should try to find common ground.
The Australian position is less developed. On appointors’ powers to remove trustees, the New South Wales Court of Appeal in Baba v Sheehan [2021] NSWCA 58 expressed serious doubt that the power is fiduciary, but accepted that it is still constrained by the doctrine of fraud on a power and by the purposes of the deed. Australian courts may not follow the offshore cases, and each deed’s wording is critical.
The limits on a protector’s power
Even a wide discretion is not unlimited. A protector’s decision may be challenged where:
- It is made for an improper purpose. A protector who refuses consent to punish a beneficiary for personal criticism, to put pressure on a beneficiary’s spouse, or to advance the protector’s own business interests is using the power for a purpose it was not given for.
- It is a fraud on the power. This doctrine applies where a power is exercised to achieve a result outside its scope, for example to benefit someone who is not an object of the power, or under a side arrangement.
- It takes account of irrelevant matters, or ignores relevant ones. A letter of wishes is usually relevant; a personal falling-out usually is not. In our example, the protector’s reliance on the daughter’s criticism of him is a warning sign.
- The protector has a conflict. If the protector stands to gain from the decision, the no-conflict principle may apply where the power is fiduciary.
When the settlor is also the protector
Some settlors appoint themselves protector so they can keep influencing distributions. If the settlor keeps too much control, a court may look past the trust, whether in a family law property settlement, a creditor claim or a tax review. In Australia, the High Court’s decision in Kennon v Spry [2008] HCA 56 shows how control over a trust can bring its assets into a family law dispute. A settlor-protector should act within the deed and for its purposes, and should take advice before directing the trustee on what to do.
The trustee’s position
A trustee caught between a protector and a beneficiary cannot simply ignore the protector. If the deed requires consent, a distribution made without it may be invalid.
Nor can the trustee just follow the protector’s wishes. The discretion to distribute belongs to the trustee, which must consider the request on its merits and cannot hand its decision over to the protector. The trustee should give the protector the information it reasonably needs, listen to its concerns and revise the proposal where they have merit.
Practical paths to resolve a disagreement
- Talk informally first. Before any formal proposal, the trustee can discuss the request with the protector and key family members. Changing the amount, timing or form, such as a loan instead of a gift, may meet the objection.
- Record the reasons. The trustee should minute what it considered and why. The protector should also record its reasons for consenting or refusing.
- Ask beneficiaries for their views. This informs the trustee and lets the family feel heard.
- Seek a negotiated outcome. A revised proposal, a staged distribution or conditions may bridge the gap.
- Use mediation. A mediator can help the trustee, protector and family members resolve the dispute privately and without public proceedings.
- Go to court as the formal route. The trustee or protector can ask the court that supervises the trust for directions, or for a declaration on the scope of each party’s powers. This is usually a court of the governing law, so local advice is needed.
Drafting lessons
- Define the protector’s role clearly: is it a watchdog checking for rationality, or an independent decision-maker?
- State whether the powers are fiduciary or personal, and what the protector may and may not take into account.
- Plan for succession: who becomes protector on death, incapacity or resignation.
- Plan for deadlock: a time limit for responding to requests, a process for escalation, and mediation before court.
Frequently asked questions
What are trust protector powers?
They are powers that a trust deed gives a protector to oversee the trustee, such as removing trustees or consenting to distributions. The deed defines them.
Can a protector refuse consent to a distribution?
Yes, if the deed gives a consent power. But the refusal must be made in good faith, for proper purposes and without relying on irrelevant matters.
Is a trust protector a fiduciary?
Offshore courts, including the Jersey court and the Privy Council, have treated protectors as fiduciaries. In Australia the position is less settled, and the deed’s wording is critical.
What happens if the trustee and protector cannot agree?
The trustee usually cannot proceed where consent is required. The parties can negotiate, mediate or, as a last resort, ask the court for directions on the scope of their powers.
How Chua Tan Associates can help
Chua Tan Associates reviews trust deeds, letters of wishes and protector appointments to work out who holds which power and what limits apply, and advises trustees, protectors and beneficiaries when a distribution is blocked. Justin Chua is a Nationally Accredited Mediator and Family Dispute Resolution Practitioner, and an Accredited Family Business Advisor, and we help families resolve these disagreements privately. Where the trust is governed by offshore law, we work with local lawyers in Singapore, Hong Kong, Jersey, the British Virgin Islands and elsewhere, and we advise in English, Mandarin and Cantonese. We also help settlors redraft protector provisions so role, succession and deadlock steps are clear.
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Chua Tan Associates acts for families, executors, trustees and their professional advisers in estate planning, estate administration and estate disputes in Australia and across borders. To arrange a confidential consultation, please contact our Melbourne office on +61 3 9602 3988 or submit an enquiry. Advice is available in English, Mandarin and Cantonese.
Justin Chua (蔡智勋), lawyer and mediator, Chua Tan Associates, Melbourne. General information only, not legal or tax advice.
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