We wanted to tell you about a recent trust dispute success we
– alongside Mourant Ozannes and Andrew Holden of XXIV Old
Buildings - secured in the Guernsey Royal Court for a set of
beneficiaries who felt that the very person appointed to protect
and guard their interests, was no longer doing so. This case, known
as the 'K Trust', demonstrates that the courts can
intervene to remove a protector whose approach was no longer
considered to be in the best interests of the beneficiaries.
Hello I'm Dawn Goodman. I'm a lawyer who specialises
in trust and estate disputes at Withers in London. My colleague
Emma McCall and I are going to discuss the recent groundbreaking
case in which we advised the beneficiaries and which saw the
Court remove a Protector of a trust for the first time in
Guernsey. When someone sets up a trust for the benefit of
their family or others they want to provide for they often
like to appoint a trusted adviser or a friend to protect
the interests of the beneficiaries, particularly where the
trustee is a trust company they do not know very well or is
But what happens when the Protector stops protecting? Or
even worse where the Protector actually becomes the problem
and the beneficiaries need protecting from the Protector. In a
number of cases across the world, Protectors who are mad or bad
have been removed by the Court. Typically they have taken off
with a lot of the trust assets or they've made a claim against
the trust itself. But in the case that Emma and I were
involved in the situation was less radical. Nonetheless, the
Court thought it was right to intervene to prevent a trustee
or a Protector from clinging to office for too long.
Well by way of background, the K Trust was created in
1990 by a successful businessman. He appointed a lady who was
his financial adviser and friend as Protector with wide-ranging
powers. When the Settlor died in 2001, his widow was the sole
beneficiary of the trust. He requested that following his
death, the trust be administered in accordance with her
wishes. At the widow's request, a number of beneficiaries
were added, including her nephews and niece. The widow
requested that the Protector step down. The Protector
acknowledged that she had lost her relationship with the
widow. However, she believed that the Settlor had wanted a
non-family member to be in that role and she considered that
she was privy to his wishes and best placed to put them into
effect. By 2011 the problems had come to a head and the
beneficiaries requested that the trust be wound up. The
Protector was not supportive. Having received a formal request
threatening her removal, the Protector agreed to step down
however only on the basis that she be fully indemnified in
relation to any liabilities she may have as Protector and that
she receive all of her costs.
Well because the Protector declined to go unless she
received these indemnities and all her costs, proceedings were
commenced to remove her and the Court decided that it was going to
remove her from office. The Court decided to follow the
principles which had been set out by the Jersey royal court in
a case in 2012 where we also acted for the successful
beneficiaries. There the Court decided that the overriding
criteria when considering whether to remove a trustee from
office, and by analogy a Protector, was first of all what was
in the interests of the beneficiaries as a whole and secondly
what was important to ensure the efficient administration of the
trust in their interest. The Court also removed the Protector
in this case without giving her the specific and general
indemnities that she wanted.
The message is clear. A Protector can not expect to
stay on simply because they were chosen by the Settlor. When
asked to set down by all or even a majority of the
beneficiaries, a Protector should respond without delay and
should seriously consider exiting gracefully.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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