150 Jersey trust professionals at Carey Olsen’s annual Autumn trusts seminar on Thursday 24 November 2011 have been advised to ensure they follow the proper steps in the decision-making process when making trustee decisions.
Carey Olsen’s seminar was chaired by partner and Head of its Fiduciary Law Group, Paul Matthams and included presentations from partner Robert MacRae and senior associates Victoria Connolly and Keith Dixon. The seminar closed with a case study run by partners Siobhan Riley and John Greenfield. It examined the trustee’s toolkit of powers and protections against common issues raised by settlor, beneficiaries and third-party creditors.
The Carey Olsen team highlighted a number of high profile cases, in many of which the firm has been involved, where trustees’ decisions were questioned or challenged.
Fiduciary Law Group partner Siobhan Riley and Guernsey office managing partner John Greenfield facilitated a practical case study discussion to highlight some of the key issues.
Advocate Matthams said the professionalism and high regard with which Jersey trust practitioners are held are key selling points for the island in an increasingly competitive world and Carey Olsen was pleased to be involved in adding to the existing knowledge and expertise of local trust practitioners.
“The trust world is an increasingly challenging environment for trust professionals to operate within and it is important that experts are equipped with the appropriate tools to meet the various challenges that can arise when making day-to-day decisions. We have shared the key issues trustees need to take into account and examples from our experience about some of the potential hotspots we see in our practice,” he said.
Miss Connolly provided delegates with an overview of the core elements of proper decision-making including the proper considerations that need to be given to the decision, as well as the need to ensure the right documentation is kept.
“While some of these aspects may appear obvious it is essential that these elements are not overlooked. Likewise, trustees must comply with their duties when taking decisions and should act honestly, and in good faith, and also take into account only, and all, relevant factors while ignoring irrelevant factors.
“It is particularly important that trustees keep complete and accurate records documenting how decisions are made. In certain circumstances, the Court may be able to assist, for example by approving in advance a momentous decision taken by a trustee, or, where a breach of trust has occurred, the Royal Court may relieve a trustee wholly or partly of liability for the breach if it can be proved that he has acted honestly and reasonably, and ought to be fairly excused,” added Miss Connolly.
Advocate MacRae explored the recent developments in England and Jersey which give guidance as to the circumstances in which decisions made by trustees can be set aside and, when transfers of property such as gifts into trust can be reversed on the ground of mistake.
Advocate Dixon explored the rights of creditors and advised that the law seeks to strike a balance between the freedom of a person to dispose of their own property and the interests of creditors.
He pointed out that trustees often end up caught in the middle in this scenario. In the transfer of assets Advocate Dixon recommended that, at the outset, trustees undertake thorough due diligence, determine and set-up the most appropriate structure correctly and establish operating protocols for external parties such as the consideration of third party powers.
Audience members were invited to participate in the debate on the fictional case study. The case study required participants to consider the steps to appropriate decision-making in the context of a Jersey law discretionary trust. They were asked to consider the pros and cons of the issues, spot potential vulnerabilities and suggest how best to mitigate their risks.
Advocate Riley said: “As a law firm we always endeavour to be practical in the legal advice we give, we apply the same approach to our seminars. The case study is designed to help trustees apply the law in practice so that they can avoid problems arising in the first instance and, where problems do arise, manage the consequences in the best interests of beneficiaries.”