Wrangling With Wasting Assets – A New Challenge For Cayman Trustees

As the global financial services industry continues to grapple with the consequences of the turmoil faced around the world over the past twelve months, further unexpected challenges continue to present themselves to those in fiduciary roles such as trustees. One example of such challenges is a rise in the number of wasting assets that a professional trustee might now find it holds as part of its administrative mandate. These wasting assets (for simplicity, any asset which is going down in value or is likely to go down in value of time) can be problematic and require careful handling, with reference to the trustee's own powers and duties, to manage the associated risks.

A good example of circumstances in which a trustee can, somewhat unexpectedly, find itself with a portfolio that includes wasting assets, can be seen in a recent announcement by UBS Bank. The bank's decision to charge a negative interest rate of 0.75% on all client accounts with more than CHF 250,000¹