In a recent judgement re the Z Trusts [2015] JRC196C from the Royal Court of Jersey it was held that the test for an insolvent trust is a cash flow test, rather than a balance sheet test. Once an insolvency, or probable insolvency, arises, the trustee or other persons holding fiduciary powers can only exercise those powers in the interests of the creditors. This a significant case as there is little authority on insolvency trusts.

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