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21st December 2020

Over €340,000,000 in family Trusts: What could go wrong?

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The High Court was asked to decide if a protector had been validly appointed to a series of family Trusts in a decision that would affect hundreds of millions of euros.

The Settlor made a series of Trusts for the benefit of his family, with him acting as protector.  The role of a protector is to watch over the Trustee(s).  The protector will be given specific powers under the terms of the Trust, such as the power to remove or appoint trustees. In this case, following the Settlor’s death, the beneficiaries wished to restructure the Trusts but could not agree as to how. The matter came before the Court when the professional trustee asked for determination on whether a replacement protector had been validly appointed by a section of the beneficiaries.

The Trust documents were quite straightforward. Following the Settlor’s death, his personal representatives could appoint a replacement protector. However, although the Trust was governed by English law, the Settlor was actually a resident of Monaco and had no property in England. Matters were further complicated by the Settlor dying in Switzerland, the Trust being administered in Jersey, having assets in the Bahamas, and the professional trustee being a New Zealand based company.

No concept of personal representative exists under Monegasque law. The other beneficiaries objected to the appointment of the protector, who would thwart their proposed restructuring. They argued that the recipients of the Settlor’s property were not ‘personal representatives’ and therefore could not appoint a protector.  The Court concluded that the Settlor’s beneficiaries in Monaco were analogous to personal representatives in England and therefore the protector was validly appointed.

The case serves as a reminder of the importance of considering the laws of other jurisdictions if the settlor or beneficiaries have foreign connections, or if there are assets in other countries.

With our team of UK Trust experts, and as the founding member of Law Exchange International, Hewitsons is well placed to assist.

For more information on any of the items raised in this article please contact Kerri Woodrow on 01604 463350, or click here to email Kerri, or alternatively please contact Katherine Hague on 01223 532749, or click here to email Katherine.

Case Citation: PTNZ v AS and 9 Others [2020] EWHC 3114 (Ch)