The Society of Trust and Estates Practitioners, the international professional body of trusts and estates advisers, has produced a significant new book on transfer of trusteeships. Working alongside lawyers from a wide range of offshore jurisdictions, a team from Bircham Dyson Bell LLP, led by Helen Ratcliffe, contributed the England and Wales precedents.
One of the distinctive features of the common law system across the world is the trust. Satisfactory definitions of a trust are rare but one of the essential characteristics of a trust is the existence of the trustee, the person who has control of the trust assets and must deal with those assets for the benefit of the beneficiaries. The position of the trustee of a trust is a responsible one, governed by the provisions of the trust instrument, statute and the interpretation of the courts.
We are often involved in trusteeship changes – at one end of the scale an individual trustee may simply wish to retire or may have died; at the other end, tensions may have escalated to the point where it is in the best interests of all concerned for there to be a change. A change in trustees sounds simple enough, but the reality is that ensuring a valid appointment is made and that all the trust property is in the correct ownership can be tricky and involve difficult negotiations.
One of the questions which arises on a trusteeship change is how best to protect the retiring trustee who will be parting with control of the trust assets. As a trust is not a separate legal entity, everything the retiring trustee will have done will have been done in his own name. To the extent that a trustee has acted properly, he is entitled to be reimbursed from the trust assets in respect of those personal liabilities and he does not lose that right by ceasing to be a trustee and parting with the trust assets. However, increasingly, a departing trustee will want to protect his position further by negotiating a contractual indemnity with the incoming trustee. What is an appropriate amount in such cases can be difficult to agree. In May this year the Society of Trust and Estate Practitioners, the representative body for trust advisers, published a new book, A Practical Guide to the Transfer of Trusteeships, providing a protocol and model precedents for various common law jurisdictions on this subject, with particular reference to the best way of providing sufficient protection for the outgoing trustee whilst not overly fettering the position of the incoming trustee. The book provides precedents for the UK and for a wide range of offshore jurisdictions and the Bircham Dyson Bell LLP Private Client Department was invited to contribute the precedents for England and Wales and to assist with the commentary. The team comprised Helen Ratcliffe, Judith Morris, Carol Haworth and Victoria Pursall, who spent a very busy few months between November and early April, keeping ahead – just! – of the printing deadlines.