Trust corporations and professional trustees that take on the role of trustees as part of carrying on a business invariably wish to ensure they can:

Charge and recover their fees and expenses; and

Minimise their exposure to claims made against them for breach of trust.

Trustees’ fees and expenses are frequently a source of disputes with beneficiaries, the settlor or successor trustees. Trustees’ commercial interests in administering the trust efficiently and profitably can, on occasion, conflict with their duty to administer the trust in the best interests of the beneficiaries. In order to manage this conflict it is suggested that trustees should:

Ensure that the trust instrument authorises the payment of the trustees’ fees and expenses from the trust fund or that the settlor or some other person(with sufficient resources) has agreed to pay and, if necessary, provide security for such fees and expenses;

Ensure the level and type of fees charged are not precluded by the terms of the trust instrument and are clearly set out in the trustees’ fee schedule;

Ensure their fee schedule has been disclosed to the settlor, protector, enforcer, primary beneficiaries, unit holders or such persons to whom the trustees have a duty to account1;

Provide sufficient notice (to the persons to whom the trustees have a duty to account) for any changes to the fee schedule; and

Clearly set out the level of fees and expenses charged to the persons to whom the trustees are required to account to.

In most common law jurisdictions, these requirements are reflected in the general law,2 applicable trust and regulatory statutes and codes of practice.

Trustees’ terms of engagement often contain provisions which may purport to set out the services the trustees have agreed to provide, indemnify the trustees, release trustees from liability and limit the amount of the damages that the trustees may be required to pay if they become personally liable for any loss. This Guide considers the extent whether trustees’ terms of engagement can achieve such objectives. This Guide also considers issues for trustees to consider when negotiating terms of exoneration and indemnification with their (unrelated) delegates.

Read More

Type

Insight

Locations

Bermuda

Share
Twitter LinkedIn Email Save as PDF
More Publications
28 Jun 2022

Bermuda: a restructuring destination

Bermuda has an outsized, first-class insurance and financial sector, attracting complex, multination...

Contributors: James Batten
27 Jun 2022

Insurtech ILS and the New Normal

As Bermuda and the global markets with which the Island transacts move towards the so-called  ‘ne...

Contributors: Josephine Noddings
23 Jun 2022

Digital Assets in a Crypto Winter

In 2013, IT engineer James Howells was cleaning out his house. He had two identical hard drives: one...

Contributors: James Batten
22 Jun 2022

Bloomberg Tax Country Guide: Bermuda

Bloomberg Tax Country Guides provide overviews of the tax regimes of more than 200 jurisdictions. Th...

Contributors: Ashley Bento
9 Jun 2022

Bermuda’s long-term re/insurance landscape

Bermuda’s long-term re/insurance market has grown considerably in recent years. The island now has...

2 Jun 2022

Provisional Liquidation In Bermuda

Provisional liquidation in Bermuda is a distinctive, flexible regime that operates to support compan...

Contributors: James Batten
23 May 2022

The good life: Bermuda’s new economic pillar

The life sector has moved swiftly from being a new ‘nice-to-have’ in the Bermuda marketplace, to...

5 May 2022

Restructuring of (Re) Insurers during Covid-19

Restructuring involves changing the financial, operational, legal or other structures of a business ...

28 Apr 2022

Assignment, novation or sub-participation of loans             

Transfers of loan portfolios between lending institutions have always been commonplace in the financ...

21 Apr 2022

Defining digital assets in insolvency proceedings

It has been more than a decade since the creation of the first cryptocurrency, bitcoin, yet digital ...

Contributors: James Batten