Bermuda Trust News

The Supreme Court of Bermuda decided earlier this month in Meritus Trust Co. Ltd. –v– Butterfield Trust (Bermuda) Ltd [2017] SC (Bda) 82 GV that in the context of a trustee being replaced under a power of removal that the outgoing trustee had no right either to make a retention from trusts being transferred over to meet a prospective liability or to insist on a contractual indemnity from the new trustee for trust liabilities.

This is of particular relevance to English law trusts (and other jurisdictions based on English law) since the decision in part turned on Bermudian statutory provisions which are identical to our law under ss.37 (l)(d), 40(1)(b) of the Trustee Act 1925 and require trust property  to be vested in the incoming trustee without restriction or qualification. Contrast this with both Jersey law and Guernsey law where statute in both instances allows the outgoing trustee to “reasonable security” against liabilities before surrendering trust property.

The Court confirmed that the outgoing trustee had an equitable right to an indemnity and the equitable right continued after the change in trusteeship and could be enforced against the trust assets in the hands of the new trustee, although the equitable right may be of limited use in some instances depending on the particular new trustee or any  successor trustee and where they might be based.

For more information about this case and how it may affect you, please contact Robert Drysdale or a member of the Rooks Rider Solicitors’ Wealth Planning team.

 

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