Trust Protector Was Not a Party In Interest That Could Challenge Liquidation and Termination of Trust.

Here, an irrevocable trust with a South Dakota situs was created for the settlor's three children.  A trust protector was designated that had "the power to represent the Trust with respect to any litigation brought by or against the Trust if an Trustee is a party to such litigation" and "to prosecute or defend such litigation for the protection of Trust assets."  Ultimately, the children who were the beneficiaries and trustees liquidated the trust and distributed the proceeds outright to themselves.   The trust protector sued on the grounds that the liquidation and termination was wrongful and frustrated the trust's intent.  The children filed a motion to dismiss and argued that the trust protector was not a party in interest and couldn't sue on the trust's behalf.  The court granted the motion to dismiss because, under South Dakota law, trust protectors are not a real party in interest with respect to trust litigation matters and personally didn't suffer any harm from the termination of the trust.  Schwartz v. Wellin, No. 2:13-cv-3595-DCN, 2014 U.S. Dist. LEXIS 53083 (D. S.C. Apr. 17, 2014). 

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