To recap, a “momentous decision” is one which will be of significant consequence to the trust, where the trustees have already decided on a course of action. Here, the trustees may seek the blessing of the Jersey Court which, if granted, will provide the trustees with protection from claims from beneficiaries who are potentially disappointed or disadvantaged by the course of action proposed.
All cases are fact specific of course. In the Accuro Trust case, the trustees sought the blessing of the Court in respect of three decisions relating to two trusts.
The first decision was to approve the revocation of a revocable decision to exclude the settlor as a beneficiary of one trust (Trust A).
The second and third decisions related to a second trust (Trust B) from which the (same) settlor had been excluded from the outset, and where the trustees sought to:
(a) vary the provisions of Trust B to remove the settlor from the list of excluded persons thereunder; and
(b) approve the Trustee’s in principle decision to exercise its overriding power of appointment to widen the class of beneficiaries of Trust B, so as to include the settlor.
The relief sought by the trustees, on behalf of the three minor beneficiaries and any unborn persons, was to afford the trustees greater flexibility in tax planning, particularly following the changes introduced to the UK fiscal landscape with effect from 1 April 2017.
In considering a ‘momentous decision’, the function of the Court is not to make the decision for the trustees. Nor is it, having ascertained that the proposed course of action is within the terms of the powers of the trustees, whether the Court would exercise such powers in the same way if asked. Instead, the Court must ask:
(i) is the trustee making the decision in good faith?
(ii) is the decision a reasonable one for the trustee to make in the circumstances?
(iii) could the decision have been impaired by any actual or potential conflict of interest?
In relation to the Accuro Trust case, the Court was so satisfied in all of the above respects in relation to the proposals in respect of Trust A, and in relation to the first proposal in respect of Trust B.
However, the Court took the view that the second proposal in relation to Trust B, to exercise the power of appointment, having the effect of admitting the settlor to the class of beneficiaries, was not, in itself a momentous decision, and was squarely within the trustee’s existing powers. This was the case notwithstanding that the Court was aware that, in due course, the trustees might subsequently appoint the entire trust fund out to the settlor to enable a resettlement.
That said, the court declined to opine whether or not a subsequent decision to distribute the trust fund to the settlor would be a momentous decision.
If you would like further information please get in touch with your usual contact at MTG, or email info@mtgllp.com.
This note does not contain or constitute legal advice, and no reliance should be placed on it.
Rebecca Waterhouse
Counsel
Rebecca Waterhouse is a Counsel in Maurice Turnor Gardner’s Private Wealth department.