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Modification of Trusts and Planning for Change: Bermuda

April 2009 Alec R. Anderson

This paper contains a review of the legal principles and methodologies which apply to the modification of trusts under Bermuda law. This review naturally considers the motivations for trust amendments and as an illustration outlines a number of actual cases and decisions from my Bermuda practice.

In modern trust law practice, given the rate at which onshore tax laws are continuously revised to apply more effectively against offshore trusts coupled with the recurring yet natural change of economic circumstances affecting either the beneficiaries directly or the trust assets, there is high demand for technical restructuring of trusts. The draftsman cannot foresee all possible scenarios which may occur in the future. Fortunately, Bermuda law does provide trustees with a number of statutory powers and provisions which enable them to reorganize trusts in order to adapt to adverse developments, thereby affording the opportunity to protect the trust fund and the beneficiaries’ interests.

While reviewing the recurring themes constituting the driving factors which lead to the modifications of trusts, this paper outlines the law applicable to amending and/or restructuring of trusts through:

  • expressly granted trustee powers, such as the power to amend, express powers of appointment and advancement, and the statutory power of advancement;
  • Court approval of variations of trusts under Section 48 and especially, Section 47 of the Trustee Act 1975 (“TA 1975”) which relates to the potential conferring of a power on trustees to carry out a transaction (and thereby amending the trust’s dispositive provisions); and
  • the re-domiciliation of a trust to a new jurisdiction along with the change of governing law.

 

To continue reading full articles in PDF format:
Modification of Trusts and Planning for Change: Bermuda

 


Alec R. Anderson
Director, Global Head of Private Client & Trust

Bermuda   +1 441 299 4945


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Articles

Modification of Trusts and Planning for Change: Bermuda

30 April 2009 Alec R. Anderson

This paper contains a review of the legal principles and methodologies which apply to the modification of trusts under Bermuda law. This review naturally considers the motivations for trust amendments and as an illustration outlines a number of actual cases and decisions from my Bermuda practice.

In modern trust law practice, given the rate at which onshore tax laws are continuously revised to apply more effectively against offshore trusts coupled with the recurring yet natural change of economic circumstances affecting either the beneficiaries directly or the trust assets, there is high demand for technical restructuring of trusts. The draftsman cannot foresee all possible scenarios which may occur in the future. Fortunately, Bermuda law does provide trustees with a number of statutory powers and provisions which enable them to reorganize trusts in order to adapt to adverse developments, thereby affording the opportunity to protect the trust fund and the beneficiaries’ interests.

While reviewing the recurring themes constituting the driving factors which lead to the modifications of trusts, this paper outlines the law applicable to amending and/or restructuring of trusts through:

  • expressly granted trustee powers, such as the power to amend, express powers of appointment and advancement, and the statutory power of advancement;
  • Court approval of variations of trusts under Section 48 and especially, Section 47 of the Trustee Act 1975 (“TA 1975”) which relates to the potential conferring of a power on trustees to carry out a transaction (and thereby amending the trust’s dispositive provisions); and
  • the re-domiciliation of a trust to a new jurisdiction along with the change of governing law.

 

To continue reading full articles in PDF format:
Modification of Trusts and Planning for Change: Bermuda

 


Alec R. Anderson
Director, Global Head of Private Client & Trust

Bermuda   +1 441 299 4945


 

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