As a matter of Jersey law, where a trustee retires or is removed
it is entitled to be provided with reasonable security for
liabilities before surrendering the trust property. As there is no
statutory lien under Jersey law the provision of a contractual
indemnity to an outgoing trustee as security for its proper
liabilities is standard practice. This article will look at what
level of indemnity is generally acceptable in negotiations between
an outgoing and incoming trustee and will consider recent
developments in the Royal Court of Jersey in relation to the
concept of a non-possessory lien.
Why is an indemnity necessary?
Where a trustee retires or otherwise relinquishes control over
the assets of a trust, it faces the prospect of continuing personal
exposure to liabilities arising in connection with the trust
without direct access to the assets from which it would previously
have been able to reimburse itself.
