Adams Co. involved a professional negligence suit brought against the English law firm Theodore Goddard (now Addleshaw Goddard) over purported negligence in its retirement of two trustees to facilitate the transfer of a trust from England to the Channel Islands. The salient point in the decision was that in replacing the two individual trustees with a company which was not a trust corporation, the requirements of the English Trustee Act 1925 (the English Trustee Act) had not been complied with and therefore the appointment had not been effective to discharge both of the trustees. In essence, a trustee who purported to retire remained as trustee and would still be personally liable for breaches of trustees’ duties. This might also mean that a trust has not divested itself of an unwanted residency status leaving on-going tax and regulatory implications.

The Isle of Man Trustee Act 1961 (the IOM Trustee Act) is very similar to the English Trustee Act, and Manx trusts are currently subject to similar restrictions as those delineated in Adams Co. Manx trusts cannot have more than four trustees at one time, and must have at a minimum two individual trustees or a trust corporation (unless a settlor creating a trust has decided otherwise). A trust corporation is a corporate, meeting certain applebyglobal.com 2 conditions prescribed by the IOM Trustee Act, including a requirement to hold an appropriate licence issued by the Isle of Man Financial Supervision Commission (the FSC). It does not describe just any company acting as a trustee, as highlighted so explicitly in Adams Co.

Traditionally the reason why two individual trustees were required by statute law was to guard against the misuse and misappropriation of trust assets. Although trust corporations can act alone as a trustee, they are intended to be monitored by their internal corporate governance to provide a check against abuse. They are also subject to the supervision and regulation of the FSC. However, the reason why trust corporations are afforded special status over companies acting as trustees has become less clear; and further to this, the sentiment of the trust industry is that the statutory requirement for two individual trustees has a prohibitive role in administering trusts. With these arguments in mind, and in the knowledge that there is a well regulated and professional trust industry in the Island, Tynwald has included in the Trusts Bill the abolition of the requirement to have more than one trustee, whether corporate or individual.

The Trusts Bill also demonstrates further progressive developments in Manx trust law, and in particular the abolition of the rule against perpetuities.

Share
Twitter LinkedIn Email Save as PDF
More Publications
20 Mar 2023

Trusts: Comparison between the Crown Dependencies

Our Private Client and Trusts specialists in Guernsey, Isle of Man and Jersey outline some of the ke...

Contributors: Paula Fry, Melissa Wong
19 Jan 2023

The Edinburgh Reforms: An Offshore Perspective

On 9 December 2022, the UK Chancellor of the Exchequer announced a package of reforms to the UK fina...

15 Nov 2022

Insurance and reinsurance in the Isle of Man: Overview

A Q&A guide to insurance and reinsurance in the Isle of Man. Reproduced from Practical Law with the ...

3 Nov 2022

Significant Judgment for Isle of Man Fund Managers

A rethink of exclusion clauses in fund agreements may be needed after the Isle of Man’s appeal cou...

Contributors: Garry Manley
25 Oct 2022

An update to Isle of Man Trust Law

In the week that the Trust and Trustees Bill 2022 goes for its second reading (25 October 2022), it ...

27 Sep 2022

Similar but Different

While the basic features of the trust remain, there are some notable differences in how trusts can b...

25 Jul 2022

Balancing Regulatory and Data Protection Compliance

This article considers data protection compliance in the context of financial services regulatory co...

Contributors: Claire Milne WS
30 Jun 2022

Getting into the Weeds: Isle of Man Regulation of Global Cannabis Investments

The global cannabis industry has grown rapidly in recent years as a number of jurisdictions have lib...

Contributors: Sophie Corkish
24 Feb 2022

Welcoming Fintech Innovation in the Isle of Man

The Isle of Man Financial Services Authority (IOMFSA) has published online support for fintech innov...

25 Nov 2021

Regulatory Approach to ESG across the Crown Dependencies

New requirements may require investment products to display a label reflecting their sustainability ...