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Death of Protector

PostPosted: Tue Nov 28, 2017 11:45 am
by giompizz
Was just wondering if a Protector dies and there is no mechanism in the trust deed for his/her replacement, is there any statutory law or other ways to appoint a new protector? Or is the trust now stuck without a Protector to administer the trust? Who would the duty fall on?
Thanks!

Re: Death of Protector

PostPosted: Tue Nov 28, 2017 12:11 pm
by atticus
Every now and then we get questions about "Trust Protectors". This is some kind of super trustee used in some other jurisdictions, usually "offshore".

I would suggest that responsibility falls on the trustees to sort this out.

Re: Death of Protector

PostPosted: Tue Nov 28, 2017 12:51 pm
by atticus
This law firm article may be helpful.

If a Protector dies then they are removed from office, but this can leave the trust in disarray if there is no drafting to deal with this contingency. This is because if, on a proper construction of the trust instrument, the powers of the trust protector are considered to have been conferred on them in their individual capacity only, then the powers will die with them.

Moreover, another consequence that could arise from the death or serious incapacity of a protector is that they leave a vacancy - there is no protector able to exercise the powers set out in the trust instrument. This could lead to paralysis, depending on the way in which the particular trust instrument is drafted.

The trust instrument should, therefore, contain a mechanism for the replacement of the departing protector and make express provision for how the trust is to be administered in any interregnum period (Re Circle Trust (2006) 9 ITELR 676 (Cayman)).

Re: Death of Protector

PostPosted: Tue Nov 28, 2017 1:22 pm
by dls
Echoing Atti, the use of the word 'protector' suggests a non-UK jurisdiction. Check the jurisdiction clause toward the end of the deed.

Re: Death of Protector

PostPosted: Tue Nov 28, 2017 4:20 pm
by giompizz
Thanks for that article Atticus, very helpful! Do UK Jurisdiction trusts never have Protectors?

Re: Death of Protector

PostPosted: Tue Nov 28, 2017 5:19 pm
by atticus
Never is a big word! I would not be so bold as to say that "protectors" never feature in trusts governed by the laws of any of the UK jurisdictions.

Re: Death of Protector

PostPosted: Wed Nov 29, 2017 3:56 pm
by dls
Any drafter of a deed can choose to use any word and define it for a purpose within that document, so, Yes, the word can be used.

Any UK lawyer however would be ver doubtfull about its use, but it has no obvious particular or standard meaning in UK law.

Re: Death of Protector

PostPosted: Mon Jan 01, 2018 11:03 am
by dls
Just found this: "The term “Guardian” is not one which has a technical legal meaning. It is a term commonly used in trust instruments to describe a person who is empowered, under a Trust Deed to direct or veto the exercise of powers conferred upon trustees; or, to choose or veto the trustees’ choice of beneficiaries of the Trust. Other powers may also be conferred upon a Guardian. Another name for a Guardian is a Protector: generally see the Law Commission’s report, Some Problems in the Law of Trusts (NZLC R 79, April 2002) at para 20. Although there is no statutory basis in New Zealand for the exercise of powers by a “Guardian” or a “Protector” it seems reasonably clear that such a person will be subject to fiduciary obligations which are sufficient to ensure that he or she acts in good faith and for the benefit of those entitled beneficially to the trust property:"