Trustee and Protector

A trust stands or falls on who actually makes the decisions. The trustee takes legal title to the assets and manages them in the interests of the beneficiaries. The protector owns nothing in the structure yet controls the trustee's key decisions: appointing and replacing the trustee, approving large distributions, adding beneficiaries, changing the governing law and other reserved matters. The settlor creates the trust, hands over the property — and, as the design intends, steps back. It is the settlor's unwillingness to step back that creates the central conflict of any trust. The diagram shows the basic construction: the settlor transfers assets to the trustee and leaves a letter of wishes, the trustee holds legal title and makes distributions to the beneficiaries, and the protector consents to key decisions and can replace the trustee.

Concretely: a Jersey trust holds the shares of a holding company; the trustee is the registered shareholder and votes them; the deed makes the sale of the operating subsidiary subject to the protector's written consent; the beneficiaries learn the outcome afterwards and can direct neither the vote nor the consent. Everything below is a variation on that division — whose signature moves the asset, whose consent gates it, and who is only on the receiving end.

If the trustee is too weak, the structure degenerates into holding title with no real function. If the settlor or protector is too strong, the trust invites attack as a sham or an illusory trust — a construction where independent fiduciary judgment never actually operated. The role map answers three questions: who decides what, who answers for what, and where the boundary of acceptable family control runs. A related but separate subject — the trustee as a formal position in a corporate structure (director, shareholder, representative) — is covered in Trustee in a Corporate Structure.

Who's who: the role map

Four roles divide ownership, control and benefit between them:

A separate line on this map belongs to the letter of wishes. It is the settlor's soft guidance with no binding force: family context, priorities, education, medical needs, business succession, attitudes to distributions. A letter that reads as a binding command weakens the trustee's independence — and the whole construction with it.

The trustee's fiduciary duties

A trustee does not act as the settlor's agent. The core duties usually include:

• Good faith and proper purpose — act honestly and exercise powers for their proper purpose
• Safeguarding the property — preserve and administer the trust assets, keeping them separate from the trustee's own
• No conflicts — avoid unauthorised conflicts of interest
• Impartiality — hold a fair balance between different beneficiaries
• Prudence — invest and delegate with due care
• Records and accounts — document every decision
• Staying within the terms — follow the trust deed and the governing law

Jersey law states this bluntly: Article 21 of the Trusts (Jersey) Law 1984 requires a trustee to act with due diligence, as would a prudent person, to the best of the trustee's ability and skill, and to observe the utmost good faith; the duty to exercise powers only in the interests of the beneficiaries sits in Article 24(2).

The protector: what the role is for and what it can do

A protector's powers are a working set of governance options. In Jersey law the protector usually enters through consent mechanics: Article 24 of the Trusts (Jersey) Law 1984 expressly allows the exercise of a trustee's powers to be made subject to another person's consent.

A separate dimension is the capacity in which the protector acts. Fiduciary powers oblige the protector to weigh the beneficiaries' interests and the proper purpose. Personal powers leave wider latitude, though a court can still police abuse, fraud, bad faith or an improper purpose.

Even so, protector powers are only powers — they confer no ownership. In Grand View Private Trust Co Ltd v Wong the Privy Council underscored the proper purpose rule: a power must be exercised for the purpose for which it was conferred. The case itself concerned a power of amendment and a power of appointment exercised by trustees, but the rule governs fiduciary powers generally, protector powers included.

What "protector consent" means was disputed for years. On the narrow view, the protector only checks that the decision is rational and one a trustee acting in good faith could reach. On the wider view, the protector forms its own judgment on the merits, as a full fiduciary. On 19 March 2026 the Privy Council in A and others v C and others ([2026] UKPC 11, an appeal from Bermuda known as Re the X Trusts) unanimously confirmed the wider approach: a protector holding a consent power applies its own fiduciary discretion to the substance of the trustee's proposal. The decision entrenched Jersey's line from Piedmont (2021) and became the reference point for offshore centres.

The practical conclusion: protector powers are spelled out expressly — where the protector only supervises and where it decides, which powers are fiduciary and which personal. A settlor who wants the protector confined to review must say so in the trust instrument in plain and unambiguous terms. Loose drafting costs dearly in court later.

Reserved powers and the limits of control

Families often want to keep maximum control: the power to replace the trustee, a veto over distributions, approval of investments, consent to asset sales. Modern offshore statutes permit part of that as reserved powers. In the Cayman Islands the settlor may reserve powers or vest them in protectors without destroying the trust — strategic influence survives while the trustee holds legal ownership and administration. The BVI follows similar logic: the regime of the BVI Trustee Act and its later amendments is used to reserve specified powers to the settlor or vest them in a protector.

The practical boundary has survived:

If the level of control the family needs will not fit into trust mechanics, it is more honest to consider foundation alternatives — a private foundation such as the Panama foundation, or the Russian personal fund for Russian assets — than to stretch a trust to its limit.

When a trust risks being a sham

In JSC Mezhdunarodniy Promyshlenniy Bank v Pugachev ([2017] EWHC 2426 (Ch)) Sergei Pugachev was at once settlor, beneficiary and protector of New Zealand trusts with very wide rights: he could refuse the trustee consent to a transaction and replace the trustee without giving reasons. The English High Court assessed the construction as a whole and concluded that, in substance, the assets remained under Pugachev's full control. Creditors reached the property as though the trusts did not exist.

What does the damage is the aggregation of powers: a veto, a power to remove the trustee and beneficiary status each occur in ordinary trusts; gathered in one person, they turn protection into decoration. For trusts whose main task is shielding assets from creditors the stakes are higher still: see asset protection trusts and the Cook Islands and Nevis constructions.

Warning signs before launch:

• Operational control — the settlor wants day-to-day charge of the trust assets
• Stacked roles — the protector is at once settlor, investment manager and principal beneficiary
• Hollow process — the trustee has no real decision-making process and was chosen for being cheap
• Powers without duties — the trust deed gives the protector unlimited positive powers and is silent on who replaces the protector
• A letter of wishes as an order — the letter reads as a binding command
• Betting on invisibility — the banking, CRS and tax analysis assumes nobody will ever see the trust

After launch:

• Distributions without resolutions — trustee minutes repeat the family's instructions with no analysis
• Undocumented consents — the protector's decisions are recorded nowhere
• Personal spending — the settlor's expenses are paid from the trust account
• Manipulating the beneficiary class — additions and exclusions made for the tax picture, with no memorandum of purpose
• Dormant oversight — the trustee never reviews investment performance
• Refusals off purpose — the protector blocks decisions for reasons unrelated to the trust's purpose

Choosing and replacing the trustee and the protector

For serious cross-border capital the default choice is a professional trustee; the terms of a resident director for a specific project are covered in Trustee in a Corporate Structure.

The middle route is a Private Trust Company: a company owned by the family or by a purpose trust acts as trustee of the family trusts.

A good protector clause in the trust deed answers four questions:

• Fiduciary or personal — in which capacity the protector exercises each power; state it expressly
• Consent before or after — the better sequence is a reasoned fiduciary decision by the trustee first, then the protector consenting or refusing against defined criteria; if the trustee never analyses the question at all, there is no genuine trustee decision for the protector to review
• Succession and deadlock — who appoints the protector's successor, what happens on death, incapacity or refusal to act, whether a committee may act by majority
• Information rights — a protector cannot supervise without trustee accounts and minutes, yet an unlimited flow of information to the settlor creates tax, confidentiality and control risks

How the trust deed and the letter of wishes sit alongside the family's other governance papers — and where soft wishes have to become enforceable instruments — is covered in the family charter.

When the trustee cannot or will not act

Two very different failures share a name. A trustee that will not act — refuses a distribution, blocks a sale, sits in deadlock with a co-trustee, drifts into inertia — is exercising or misusing a discretion it genuinely holds. A trustee that cannot act — has died, lost capacity, been dissolved or wound up, gone unreachable — has left the office empty. The remedies differ, but both start from the same fixed point: the trustee holds legal title and the discretion, so putting the structure back in order means either compelling proper administration or changing the person who holds the office. It does not mean a beneficiary taking the wheel.

That framing matters because a beneficiary's stake is economic, not managerial. In a discretionary trust an object has no fixed entitlement at all until the trustee resolves to distribute; even a fixed beneficiary owns a claim in equity, not the assets and not the trustee's decisions. A beneficiary can ask the court to supervise the trust, can seek the trustee's removal, can in defined circumstances obtain accounts — but cannot order the trustee to run any particular transaction. Confusing the two is the most common mistake in a trustee dispute.

Three sources of the answer: deed, statute, court

Every "the trustee failed" question runs through the same three layers, in order.

• The trust deed first. A well-drafted deed names an appointor or gives the protector a positive power to remove and replace the trustee. Where that machinery works, a change of trustee is a private act — a deed of removal and appointment — with no court involved.
• The governing law's default machinery second. If the deed is silent, or its machinery has failed (the appointor has died or lost capacity, or is the person who must be removed), statute supplies fallbacks. Under English law the Trustee Act 1925 lets specified people appoint replacements; in Jersey the equivalents sit in the Trusts (Jersey) Law 1984.
• The court last. Where no one able and willing can act under the deed or the statute, or the removal is contested, the court's supervisory jurisdiction is the backstop — a power exercised, since Letterstedt v Broers (1884) LR 9 App Cas 371, with the welfare of the beneficiaries and the competent administration of the trust as its main guide.

Resignation, retirement and removal

A trustee that wants out resigns or retires. In Jersey, Article 19 of the Trusts (Jersey) Law 1984 lets a trustee that is not the sole trustee resign by written notice to its co-trustees; a sole trustee cannot simply walk away and leave the trust with no trustee. Under English law a trustee retires under section 39 of the Trustee Act 1925 (retirement without a replacement, which needs the co-trustees' consent and leaves at least two trustees or a trust corporation in place) or is replaced under section 36. Separately, where the beneficiaries are all of full age and capacity and, taken together, absolutely entitled, section 19 of the Trusts of Land and Appointment of Trustees Act 1996 lets them direct a trustee in writing to retire and to appoint the person they name — a statutory expression of the rule that the people who own the whole beneficial interest can reconstitute the trusteeship.

A trustee that must be forced out is removed. The deed's appointor or protector removal power is the clean route. Absent that, an application to the court asks it to remove the trustee; the guiding principle is not punishment of the trustee but the beneficiaries' welfare, so mere friction or lost confidence is not enough unless the administration of the trust is actually being prejudiced.

A trustee that cannot act is displaced for incapacity, insolvency or dissolution. Section 41 of the Trustee Act 1925 lets the court appoint a replacement where it is expedient but difficult or impracticable to do so otherwise, and says so expressly where a trustee lacks capacity to exercise its functions, is bankrupt, or is a corporation in liquidation or dissolved. Jersey reaches the same result through Article 51, under which the court may order the appointment or removal of a trustee and give directions on any matter concerning the trust.

A trustee that is temporarily unable to act — ill, travelling, briefly conflicted — need not leave at all. Under section 25 of the Trustee Act 1925 an individual trustee may delegate its trusts, powers and discretions by power of attorney for a period that "continues for a period of twelve months or any shorter period provided by the instrument creating the power", with notice within seven days to the person who can appoint new trustees and to the other trustees; the delegating trustee remains "liable for the acts or defaults of the donee in the same manner as if they were the acts or defaults of the donor". Running the trust day to day is a different mechanism: Part IV of the Trustee Act 2000 lets trustees appoint agents (section 11 — but not to decide distributions, to allocate between income and capital, or to appoint trustees), nominees (section 16) and custodians (section 17), with asset-management functions delegated only under a written agreement and a policy statement (section 15); by section 23 the trustee is not liable for the agent's, nominee's or custodian's default unless it failed the statutory duty of care in choosing or reviewing them. Delegation therefore answers absence and lack of expertise. It does not answer a trustee that will not decide, because the core discretions are precisely what cannot be delegated.

When the blockage is the protector, not the trustee

A consent power is a condition precedent, so a willing trustee is stuck the moment the consent cannot be obtained — and three versions of that problem behave differently. Where the protector refuses, the refusal is itself reviewable: since the default characterisation of a consent power is a full fiduciary discretion on the merits (A v C, [2026] UKPC 11), a protector who blocks without genuinely applying its mind, or for reasons outside the trust's purpose, answers on the same supervisory footing as a trustee. Where the protector has died, resigned or lost capacity, the questions are whether the deed names a successor or default holder and whether the power was fiduciary — a fiduciary office is filled, while a purely personal power more often simply lapses, which may leave the trustee free to act alone. Where the deed provides for neither, the office has to be filled from outside: in Jersey, Article 51 of the Trusts (Jersey) Law 1984 lets the court order an appointment and give directions on any matter concerning the trust, and the English court reaches the same result through its supervisory jurisdiction. Until the seat is filled, the consent-gated decisions stay frozen while everything the trustee may do alone carries on — which is why a protector clause silent on succession is a structural defect rather than a drafting nicety.

Handover: replacing a trustee is not just a signature

Appointing a successor and actually moving the trust are two different jobs, and the second is where changes of trustee stall. A valid appointment does not, by itself, put the new trustee in control.

• The instrument of change — a deed of retirement and appointment — names the successor and discharges the outgoing trustee.
• Legal title has to vest. Section 40 of the Trustee Act 1925 makes a deed of appointment or discharge vest most trust property in the new or continuing trustees automatically, without a separate conveyance. But the useful exceptions are exactly the assets that matter: company shares and other registered securities must be re-registered in the register of members; registered land needs a Land Registry transfer; mortgaged land and leases requiring a landlord's consent fall outside the automatic vesting.
• Accounts and custody move by re-papering, not by magic. Bank and brokerage mandates are changed, new authorised signatories are added, and the incoming trustee is run through fresh KYC and AML checks before a custodian will act on its instructions.
• Books, records and data transfer. Trust accounts, minutes, the letter of wishes, tax filings and the record of beneficiaries pass to the successor, who cannot administer the trust — or defend its tax position — without them.
• The outgoing trustee is protected. It is entitled to a release and, for existing, future or contingent liabilities, to an indemnity or security before it hands everything over — the logic of Articles 34 and 43A of the Trusts (Jersey) Law 1984.
• Everyone downstream is notified — the protector, the beneficiaries, the directors of underlying companies, and any registry or regulator that records the trustee. Where the trust owns a trading company, the shareholder that signs resolutions, appoints directors and gives the bank mandate has just changed, so the company's own continuity papers need the same attention as on a death or incapacity in the ownership chain.

Beneficiary information rights, and their limits

A beneficiary who suspects a trustee is failing usually reaches first for information. The right is real but bounded. In Schmidt v Rosewood Trust Ltd ([2003] UKPC 26, [2003] 2 AC 709) the Privy Council held that the entitlement to seek disclosure of trust documents rests not on any proprietary right in the beneficiary but on the court's inherent jurisdiction to supervise, and if necessary intervene in, the administration of trusts. No beneficiary — and certainly no mere object of a discretionary power — has an absolute right to disclosure; the court weighs competing interests, and may refuse or attach conditions. Against that, Re Londonderry's Settlement ([1965] Ch 918) holds that trustees exercising a discretion are not bound to give their reasons, and need not produce the documents that would reveal them.

The practical shape of the right follows: a beneficiary can generally see the trust accounts and learn what the assets are, and can invoke the court's supervision if administration is going wrong — but cannot compel the trustee to explain why it chose as it did, and cannot convert an information request into an order for a distribution.

What the court is actually being asked

"Going to court" is not one application, and the answer turns on which one. English practice sorts trustee applications into the categories associated with Public Trustee v Cooper [2001] WTLR 901, set out again by HHJ Paul Matthews in Cator v Marquess of Bath ([2026] EWHC 1045 (Ch), 7 May 2026): whether a proposed action is within the trustees' powers at all; whether a proposed course is a proper exercise of a power the trustees do hold — the "blessing" of a momentous decision; the surrender of a discretion to the court; and a hostile challenge to a decision already taken.

The distinction is practical. On a blessing application the trustee has already decided and asks the court to confirm that the decision is within its powers, taken in good faith and one a reasonable trustee could reach; the court does not make the decision for it, and will not settle questions that would bind a beneficiary who is not before it. A surrender of discretion is accepted only where the trustee is genuinely deadlocked or conflicted. And a trustee that wants the costs of litigation out of the fund asks for sanction in advance (Re Beddoe [1893] 1 Ch 547) instead of assuming the fund will pay. Which court hears the matter, and whether its order will be recognised where the assets and the trustee actually sit, is a separate question that belongs to the cross-border dispute route.

Breach of trust: what a beneficiary actually gets

Where the trustee has caused loss, the remedy restores the trust fund; it is not an order for the distribution that was refused. Jersey states the measure directly: under Article 30 of the Trusts (Jersey) Law 1984 a trustee is liable for the loss or depreciation in value of the trust property resulting from the breach and for the profit that would have accrued, and gains made on one breach cannot be set off against losses on another. What that liability is worth then depends on the trustee exemption clause — and on this two respectable regimes diverge on identical wording. Under English law a professionally drafted clause can exclude liability for negligence, and Armitage v Nurse [1998] Ch 241 puts the floor at fraud, which for this purpose means an intention to act contrary to the beneficiaries' interests or reckless indifference to whether the action is contrary to them. Jersey draws the line higher by statute: Article 30(10) provides that nothing in the terms of a trust shall relieve, release or exonerate a trustee from liability for breach of trust arising from the trustee's own fraud, wilful misconduct or gross negligence. The same clause in the same deed therefore produces different exposure depending on which law governs the trust.

Changing the governing law does not change what has already happened

Whether the proper law can be replaced at all is decided by the trust's existing law, not by the law being moved to. Article 10 of the Hague Convention on the Law Applicable to Trusts and on their Recognition provides that the law applicable to the validity of the trust determines whether it, or the law governing a severable aspect, may be replaced; that Article has the force of law in the United Kingdom under section 1 of the Recognition of Trusts Act 1987. Jersey answers it expressly in Article 41 of the Trusts (Jersey) Law 1984, which lets the terms of a trust provide for the proper law to be changed from the law of Jersey to another jurisdiction — so a deed without such a clause leaves nothing to exercise.

A valid change swaps the default machinery going forward: who may appoint and remove a trustee out of court, what orders the court can make, how far an exemption clause protects the trustee. It does not rewrite the past. It does not validate a breach already committed, does not re-register shares or land — which stay subject to the law of their location and to the handover mechanics above — and does not remove a court already seised. Firewall provisions run the same way: Article 9 of the Trusts (Jersey) Law 1984 directs the Jersey court that validity, administration and beneficial rights are governed by Jersey law and that no foreign heirship rule affects them, but it binds the Jersey court, not a foreign one applying its own conflicts rules. Recognition and enforcement of the resulting judgments is therefore a separate question from the choice of law.

Four scenarios: what comes from the deed, from the law, and from the court

The same three layers resolve the recurring failures differently. The table sets each against the level that actually settles it.

Two points deserve emphasis. A refused distribution is the scenario most often misread: the court's role is supervisory, so it can set aside a decision that was made dishonestly, for an improper purpose, or without a real exercise of judgment, but it will not order the trustee to pay simply because a beneficiary wants the money. And the loss of a settlor's or protector's capacity is not the loss of the trust — a reserved power to appoint or remove the trustee, held by a settlor who is now incapable, will pass or lapse according to the deed and the capacity law; whether it can be exercised by an attorney under a lasting power or a court-appointed deputy depends on whether the power is personal or fiduciary and on what the capacity regime allows.

Authority and replacement matrix

Carrying legal title from a failed trustee to a successor is a distinct exercise from moving the beneficial interest, and neither follows the settlor's own estate. When the settlor dies, assets that were validly settled are held by the trustee and pass under the trust's terms, not under the settlor's will or intestacy; the settlor's heirs do not inherit the trust property. The exception is the structure that was never a real trust in the first place — where control was never given up, the assets are treated as having stayed with the settlor all along, which is the Pugachev result and the reason reserved powers are kept within limits.

A working configuration

For family capital the working model usually consists of three parts.

The trustee/protector design is worked through together with the trust's underlying design, the types of trusts and the tax analysis — for British assets, above all trusts and inheritance tax. Where the trust holds a family business, the role map is combined with the design of the family holding; the wider context sits in the succession planning hub. A role map without tax and governance analysis is incomplete.