After his personal injury lawsuit settled in 1999, Robert T. McLean’s grandmother and his lawyers set up a special needs trusts to handle the net proceeds. That way, Mr. McLean could continue to qualify for Medicaid benefits, and his trust money could supplement the provision of those basic needs.

The trust named Mr. McLean’s personal injury attorney J. Michael Ponder as “trust protector.” The trust recited that Mr. Ponder would have the power to remove and replace the trustee of the trust. When the original trustee resigned, Mr. Ponder appointed another attorney to serve as trustee. The new trustee was familiar with Mr. McLean’s case — in fact, he had been the lawyer who originally referred the personal injury case to Mr. Ponder.

Eventually the new trustee also resigned — in the wake of allegations by Mr. McLean that improper trust expenditures had been made. Mr. Ponder appointed another new trustee, then appointed his own successor trust protector, then resigned himself.

Eventually Mr. McLean’s grandmother became trustee, and she filed a lawsuit against Mr. Ponder. He promptly asked the trial judge to dismiss the lawsuit, noting that the trust gave him the power to monitor the trustee, but not any duty to do so.

Although the judge dismissed the lawsuit against Mr. Ponder, the Missouri Court of Appeals reversed the dismissal and ordered further hearings. The appellate court pointed out that state law does not describe the duties of a trust protector, and that the trust document itself identified Mr. Ponder as a fiduciary.

The appeals decision does not mean that Mr. Ponder is liable to the trust for any losses or problems. It does mean that Mr. McLean’s current trustee will have another chance to convince a judge that he had a responsibility to monitor the previous trustees, their trust expenditures and investments. McLean Irrevocable Trust v. Davis, January 26, 2009.

Missouri, where the McLean case arose, has adopted a version of the Uniform Trust Code. The UTC introduced the trust protector concept to Missouri law, but did not define or describe it in detail. That means the courts will be given the job of considering the role, its limitations and the possibility of liability for either failures or mistakes.

Arizona has also adopted its own version of the UTC. In Arizona, however, the legislature modified the terms to make clear that a trust protector is not a fiduciary. Does that mean Mr. Ponder would not liable if the trust had been in Arizona? Not necessarily. There is that provision of Mr. McLean’s trust that identifies the trust protector as a fiduciary. Besides, the concept is new to Arizona law as well.

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