Remuneration of outgoing trustee

Trusts Discussion
1

I have a trust governed by Trusts Jersey Law. The trust has one trustee and one protector. The sole beneficiary is an Italian bank (it is a trust set up to give a bank a security for the repayment of a debt).
The trust fund includes only the 100% of the shares of an Italian s.r.l. (a company similar to a UK ltd).
Under the trust deed the trustee may be revoked with the consent of the majority of settlor, protector and the beneficiary.
The settlor and protector revoked the trustee a couple of week ago without any specific reason (the debt is being repaid, thus the trustee does not have to sell the share in the company; the trustee is waiting and seeing what happens to the debt).
The remuneration of the trustee has not been ever paid out of the trust fund. The trust fund had and has no liquidity and the settlor did not put any into the trust fund notwithstanding a specific provision in the trust deed.
My questions are the following:

  1. Is the revocation of the trustee effective considering that it is well established in Jersey law that the power of revocation is a fiduciary one?
  2. Can the outgoing trustee refuse to vest the shares to the incoming trustee until his remuneration is paid?
  3. Should revocation is effective and the trustee can not refuse to vest the shares to the incoming trustee, what means the trustee has at his disposal to make himself paid?

Daniele Muritano

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2

  1. I presume you mean removal of a trustee rather than revocation (“revocation” usually means terminating the trust in favour of the settlor). It depends entirely on the circumstances. The parties who elected to remove the trustee must have some reason(s), good or bad. It may also depend on the quality of the replacement. It’s impossible to judge it without knowledge of the full facts.

  2. Depends on the terms but assuming the trustee has a right to its fees from the trust fund, it can likely retain the trust fund (or part thereof) until it has another means to secure payment of its fees and any other liabilities.

  3. The trustee may have a contractual right with the settlor for payment of its fees (if there is an agreement to that effect). It will likely also have a right against the new trustee under a general lien against the trust fund and/or an express right under the trust deed to indemnification for all liabilities.

Andrew Goodman
Osborne Clarke LLP

3

Thank you very much Andrew.

Daniele Muritano