Issues relevant to trust protectors have become a
relatively hot topic offshore and entire books have, and no doubt
will, be written on protectors. In light of an increasing number of
protector disputes, Appleby's Adam Cole takes a high-level look
at the nature of a protector's role and the relevant factors to
consider should relations with a protector become
In essence the appointment of a protector provides a means of
monitoring the actions of a trustee and checking that appropriate
action is taken to preserve the trust fund. In order to carry out
such functions, protectors may commonly be given
"positive" powers such as the power to appoint and remove
trustees and "negative" powers such as the right to
withhold consent to capital distributions to beneficiaries.
The role of a protector can, therefore, be a significant one in
the context of the administration of a trust. Protectors may be
appointed to act in a fiduciary or non-fiduciary capacity. Where
the settlor's intention in this regard is not clear, one will
need to look at the nature of the particular powers given. As a
rule of thumb, protectors will commonly have fiduciary obligations
even if this is not expressly stated in the trust
This is not always the case, however, and where, for example,
the protector is also a beneficiary that expectation may be
reversed. In any event we have seen a number of cases where the
elements that may or may not point to a fiduciary role are in
contradiction to one another and the position can very easily
become one of nuance.
Protectors can play an important role in ensuring dialogue
between the parties that are interested in a trust. When the office
works well, it can be a successful channel for maintaining harmony
in the midst of competing interests or views. This can be
particularly important, albeit potentially more difficult,
following the death of a settlor.
Protectors' powers mean that they can hold a large degree of
influence over structures. Whilst this can undoubtedly be a
positive factor, where the limitations of the role are not fully
appreciated by those in office this can lead to significant
problems for the administration of the trust. Such problems have
been seen to materialise where, for example, a non-professional
confidante of the settlor has been appointed and believes they are
entitled to act in a quasi-trustee capacity.
There are obvious reasons why it would not be appropriate for a
trustee or beneficiaries to be able to remove a protector simply
because a dispute has arisen. Where a protector has started to act
in a matter that leads to a breakdown in trust and confidence, an
extremely difficult position can, however, arise. Where such
problems affect the ability of the trustee to act in the best
interests of the beneficiaries there are steps that can be
Parties should be mindful of the factors that the Court would
consider in the context of an application to remove a protector.
The threshold for removing a protector will naturally be a high
one. It is a significant step to take and caution will be exercised
by the Court before any order is made. Mutual hostility or distrust
between the relevant parties will not suffice. A protector may
quickly become unpopular as a result of decisions that do not find
favour with beneficiaries or trustees and this would be no reason
for a protector to step down or face forced removal.
The Courts will ultimately be guided by considerations over the
welfare of the beneficiaries and the competent administration of
the trust in their favour. Where a breakdown in relations has a
significantly detrimental effect on the execution of the trusts and
is likely to continue to do so, that would be a sufficient basis
for the Court to exercise its discretion. It is not necessary that
the protector bears the bulk of the responsibility for the
breakdown in relations and the consequent difficulties caused for
the trust, but such a situation will serve to fortify the
conclusion that it is right for the protector to be removed.
Where circumstances of this nature arise, a protector would be
well advised to walk before pushed. Where this does not happen,
there is clarity on the circumstances in which the Court will
exercise its jurisdiction to forcibly remove a protector. Whilst
issues relevant to a protector's indemnities can serve to
temporarily cloud matters, in our experience the desired result can
be achieved without recourse to the Court.
In the majority of cases it should, therefore, be possible to
limit legal costs through an early dialogue with a protector's
An original version of this article was published in
theeprivateclientSpecial Review –
Guernsey 2016 report, January 2016.
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