For the first time the Royal Court of Jersey has given guidance
on the issues facing trustees of trusts who find that they are
unable to pay trust liabilities out of trust assets as they fall
due, or where the trust liabilities exceed the trust assets. Whilst
the Court recognised that it is not technically accurate to
describe a trust as insolvent, because a trust is not a legal
entity and its property is held by a trustee who is personally
responsible (to a greater or lesser extent) for meeting trust
liabilities, the concept is helpful for determining the duties of
trustees - and indeed may affect the recovery of their fees.
The Z Trust cases
There are three judgments of the Court relating to the ongoing
administration of a group of eight inter-connected family trusts
(referenced in the relevant anonymised Jersey judgments as the Z
Trusts), of which the ZII Trust and the ZIII Trust are
insolvent.[1] The judgments raise some interesting and
important issues about
