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Beneficiaries, Charities, trust

Empty Table


In the Matter of the Representation of First Island Trustees Limited raises interesting considerations about the position of a trustee who finds itself in a situation where the family who was to benefit has effectively disavowed the Trust.  The decision also highlights the practical aspect of anti-money laundering obligations and client due diligence where there is no ongoing relationship with a trust’s settlor.  The decision, which is a judgment of the Royal Court of Jersey needs to be read in light of the specific legislative provisions, but has relevance outside Jersey.  Of particular note is the view put forward regarding whose decision is blessed when a momentous decision is put to the Court.  As noted at [14] and [15]:

14.   The test to be applied in an application for the blessing of a momentous decision is well established.  As it was held in Re S Settlement [2001] JLR N 37, the Court must satisfy itself that:

(i)        the trustee’s decision has been formed in good faith;

(ii)       the decision is one which a reasonable trustee properly instructed would have reached and

(iii)      the decision has not been vitiated by any actual or potential conflict of interest.

15.    As the Court said in HSBC V Kwong [2017] JRC 214A at paragraph 48, it follows that the test is one of rationality.  When a court is deciding whether or not to bless a momentous decision, it is not exercising its own discretion and the issue is whether the decision falls within the range of decisions that a trustee, properly exercising its powers, was reasonably entitled to make, even if the court would balance the factors differently, and might have reached a different decision.

Also of interest was the approach taken to selecting charitable beneficiaries (due to the inability to locate family beneficiaries) when the discretion rests entirely with the trustees.  In First Island Trustees it was note that the decision of the Trustee as to the choice of charities satisfied the tests laid down in Re S Settlement in that it falls within the range of decisions a reasonable trustee, properly exercising its powers, was reasonably entitled to make, even if the Court might have reached a different choice of charity

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