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Should costs be borne by the income or capital of the Trusts Fund?

July 2009 - Finance. Legal Developments by Ogier .

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This English law case was an application by Close Trustees (Switzerland) SA and Close Brothers Trust Company (the “Trustees”) in respect of a trust where the life tenant was entitled to the income. After the life tenant’s death the capital would be held for the benefit of her children. The life tenant was seeking damages and compensation from both the investment management companies and the Trustees and Protector for losses in respect of the performance of investments held in the trust through the Californian Courts. The Trustees sought the approval of the Court for the retention of a proportion of the income which would otherwise be paid out to the life tenant to ensure that funds were available to reimburse the Trustees’ legal costs. The case did not consider whether the Trustees were entitled to be reimbursed for their legal costs as this would depend upon the outcome of the Californian case, but just whether the retention was permissible given the effect that this would have on the life tenant’s income.



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