Volatile asset values call for cool heads and calm decisions. Dangers abound, but a complete aversion to risk can shut off good opportunities. A question for many fiduciary businesses is whether or not to take on a new trusteeship - do they risk exposing themselves to liabilities if asset values fall, or if cash becomes tight?
There are some key steps that trustees can take to protect their positions, but worth bearing in mind is the point made clear by the Z Trusts litigation in Jersey, and likely to be of application elsewhere: a former trustee's claim to indemnification through its equitable lien has a higher priority to that of any successor trustee.
This is particularly relevant where a trust is approaching or entering the zone of insolvency. The following practical points are likely to be relevant to our clients in Jersey, Guernsey and elsewhere who are in the running for new trusteeships.
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.
