Protectors, Vista And Star Trusts Flashcards
How is a protector different from an advisory trustee?
Compulsory - must do as they say
What are sine qua non trustees?
Right of veto. Most inconvenient
What powers should protectors have?
Need a list like normal trustees
What happens if trustee relies on protector’s direction?
Trustees should not be liable for breach for any acts carried out following protector’s advice, follows Guernsey.
SLC recommendations on protectors
Express provision should be made in trust for appointment of protector
Truster confers powers
Fiduciary duties and DoC
Trustees don’t incur liability for acting under protector direction
Disadvantage of protectors?
Uncertain if really that necessary
Popular elsewhere
Generally good where trustee far away eg Shetland Islands
Should Scotland introduce?
Scotland ought to keep up to date with trust developments abroad which has been to advantage of financial and investment sectors
Special knowledge of protector could be useful
Keep at arms length, more objective stance
What are vista trusts?
Created to enable trust to hold shares in a company and to retain indefinitely
Management of company can be carried out by directors without any power of intervention being exercised by trustees
Why are trusts which hold only shares in one company normally an issue?
Conflict of interest between investment and high return and company wanting to develop
Directors might not appreciate trustees trying to take part in running of company which they don’t know anything about
Lack of diversification
Do we need vista trusts in Scotland?
Can be catered for by use of private purpose trusts
What are STAR trusts?
Private purpose trusts, not for behoof of beneficiaries
Cayman Islands followed in Guernsey, Bahamas etc
Already acknowledged to extent in Scotland
Commercial usage.
Supposed disadvantages of STAR trusts
Uncertainty
Lack of adequate enforcement mechanism
Rule against perpetuities
Public policy
Why are STAR trusts not actually filled with uncertainty?
Not a big deal
Just same as public purpose trusts, need to be clear on purpose though
Are STAR trusts contrary to public policy?
SLC unconvinced that this is an issue
Not any old thing, can’t be immoral or unworkable
Potential issue of enforcement with STAR trusts?
No beneficiaries so who?
Need dedicated enforcer
Not beneficiary - Sanders, Vautier
