The Trustee (Amendment) Act, 2021
The Trustee (Amendment) Act, 2021 (the Bill), recently gazetted and expected to be enacted in the British Virgin Islands (BVI) shortly, seeks to implement a number of important, cutting-edge changes to the Trustee Act (the Act) that will further enhance the BVI's reputation as a leading trusts jurisdiction.
We expect the proposed amendments, which follow the recommendations of the BVI Society of Trust and Estate Practitioners and mirror similar developments in other leading trusts jurisdictions, will be well received by industry. They represent the most significant development in BVI trust legislation since the introduction of the VISTA regime in 2003.
The proposed changes to the Act include:
- amendment to section 58B whereby the BVI High Court, on application by a person falling into one of the categories of eligible applicants specified in that section, will be empowered to vary the terms of a trust (including a foreign trust that changes its governing law to BVI law) without the consent of adult beneficiaries, where such variation is "expedient in the circumstances then existing, whether or not the terms of the order may adversely affect any person or purpose" and where the terms of the trust explicitly allow the application of section 58B (this introduces an ability for the BVI High Court to remedy any gaps or deficiencies that may exist to give greater impetus to the relevant trust);
- repeal and substitution of section 86 of the Act with a comprehensive, set of powers reserved to settlors and "any other person or to any office holder or body, including (but not limited to) a protector" (thus offering settlors the option, when establishing a trust, to retain a degree of control over the trust should the circumstances warrant this);
- substantive amendment to section 83A including a strengthening of the so-called "firewall provisions", aimed at resolving conflict of laws issues and protecting the original choice of law applicable to the trust and/or a specific aspect of the trust (this amendment seeks to safeguard the settlor's intentions when choosing the applicable law referred to in the terms of the trust, which choice would have been based on a desire to include specific features available under BVI law and to avoid private international law issues);
- introduction of a new section 59A which, provided a mistake of fact or law has caused serious consequences, will empower the BVI High Court, on application by a person falling into one of the categories of eligible applicants specified in that section, to set aside (in whole or in part, and either unconditionally or on such terms and subject to such conditions as the BVI High Court may think fit) the flawed exercise of a fiduciary power which, but for the fiduciary's failure to take into account appropriate considerations, would not have been so exercised (this amendment imposes a clearer test, whereby an allegation of breach of trust or duty by the fiduciary is no longer required for the application to be successful);
- expansion of the definition of "personal relationships" to include, among others, a stepchild or child born by means of artificial fertilisation or surrogacy to bring the Act into line with modern developments; and
- amendment of the recordkeeping obligations imposed on trustees of BVI trusts, including reduction of the maximum fine on summary conviction for breach of such obligations from $100,000 to $10,000).
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.