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
20 Dec 2021 |

A Time Of Regeneration: Bermuda Can Bounce Back Better

Bermuda’s economy is a mixed bag of emerging opportunities and specific challenges. But if all sec...

17 Dec 2021 |

A Rising Tide: And Ships Are Choosing Bermuda

Bermuda must remain innovative, nimble and wary of too much regulation to stay ahead of the game, ac...

17 Dec 2021 |

A Silicon Valley For ILS

As the ILS market continues to innovate and evolve, driven by external forces including ESG, it will...

3 Dec 2021 |

Americas Restructuring Review 2022

This chapter discusses the defining features of Bermuda’s insolvency landscape and the primary ins...

2 Dec 2021 |

A growing hub for the life sector

Bermuda has become a flourishing focal point for long-term insurance and reinsurance, offering the I...

2 Dec 2021 |

Provisional liquidation in Bermuda and the selection of provisional liquidators

In the absence of a formal equivalent to English administration proceedings or U.S. Chapter 11 proce...

Contributors: Sam Riihiluoma
30 Nov 2021 |

Cryptocurrencies and estate planning

When a person dies having made a will, their personal estate is transferred to their personal repres...

26 Nov 2021 |

Whistleblowing issues for employers

In recent years there have been a number of high-profile scandals brought to light by the actions of...

24 Nov 2021 |

Hong Kong Harbours Long-Term ILS Ambitions

The launch of Hong Kong’s first catastrophe bond signals the start of a new era for Asia’s insur...

4 Nov 2021 |

The Insolvency Review – Ninth Edition

The ninth edition of The Insolvency Review offers an in-depth review of market conditions and insolv...