Trustee Indemnities: Secure At All Costs?

Meritus Trust Co Ltd v Butterfield Trust (Bermuda) Ltd [13.10.2017]

It is well recognised that a trustee has a right to retain trust assets from a beneficiary in order to meet proper trust expenses and future contingent liabilities. This provides an important protection for a trustee who is facing a claim for breach of trust as well as for the trustee's liability insurers.

Less certain, however, is an outgoing trustee's right of retention as against an incoming trustee: and the availability of such a right will depend on the law of the jurisdiction where the trust is administered. English authority on this issue has been equivocal, Cayman authority has been in favour of the right and there is some Australian authority against such a right. The Supreme Court of Bermuda recently had the opportunity to consider the issue as a matter of Bermuda law.