Trustee Duties

Question 1

Q1. What does it mean that a trustee’s obligations are “fiduciary” in nature?

Answer 1

A1. It means the trustee must act with honesty and loyalty, putting the beneficiaries’ (or the purpose’s) interests above their own, and generally must not profit from the position unless allowed by the trust terms or the court.

Question 2

Q2. Summarize the key duties under Article 21(1) of the Trusts (Jersey) Law 1984.

Answer 2

A2. A trustee must:
Act with due diligence,
Act as a prudent person,
Act to the best of their ability and skill,
Observe utmost good faith.

Question 3

Q3. Under Article 21(3), how should a trustee handle trust property generally?

Answer 3

A3. They must:
Preserve the trust property (so far as is reasonable), and
Enhance its value (so far as is reasonable).

Question 4

Q4. What does Article 21(4) say about a trustee making profit?

Answer 4

A4. Unless allowed by the Law, the court, or the trust terms, a trustee must not:
Make profit from the trusteeship,
Permit others to profit from it,
Enter into a transaction on their own account that could yield profit (conflict of interest).

Question 5

Q5. Is a trustee ever allowed to profit from their role?

Answer 5

A5. Yes, if:
The court approves,
The trust deed permits it,
Another provision of the 1984 Law applies (e.g., Article 26 on remuneration).

Question 6

Q6. How must trust assets be handled under Article 21(5)–(6)?

Answer 6

A6.
They must be kept separate from the trustee’s own property,
Clearly identifiable as trust assets,
Trustee must keep accurate accounts and records.

Question 7

Q7. What constitutes a “breach of trust” under Jersey law?

Answer 7

A7. Any failure to comply with:
Duties imposed by the 1984 Law (e.g., Article 21), or
The terms of the trust instrument.
This includes not acting diligently, mixing assets, or profiting without authorization.

Question 8

Q8. How does English law sometimes view breaches of “no-conflict” rules differently?

Answer 8

A8. In English law, self-dealing or conflict-of-interest breaches are often not called “breaches of trust” per se, but rather breaches of a separate equitable rule. Jersey law, however, expressly treats it as a breach of trust per Article 21.

Question 9

Q9. Apart from court approval and trust terms, can beneficiaries consent to a trustee making profit?

Answer 9

A9. Potentially yes, but only if every beneficiary is of age and capacity to consent. In practice, it’s often hard to get all beneficiaries’ consent, so this is rare.

Question 10

Q10. What does Article 21(4)(iii) say about a trustee entering into transactions with themselves?

Answer 10

A10. It’s forbidden unless expressly allowed by the law, the trust deed, or by the court. Dealing with oneself typically creates a conflict of interest.

Question 11

Q11. Did Jersey law originally allow a trustee to contract with themselves as trustee of a different trust?

Answer 11

A11. Historically, this was unclear. But Article 31(3) now explicitly permits a trustee of one trust to contract with themselves as trustee of another trust, subject to the fiduciary duties under Article 21.

Question 12

Q12. Summarize the general trustee duties under Article 21.

Answer 12

A12. Trustees must:
Act diligently, prudently, and in good faith,
Carry out the trust per its terms,
Preserve and enhance trust property as reasonable,
Not profit from the role unless allowed,
Keep separate trust accounts and accurate records,
Avoid or be authorized for conflicts of interest (self-dealing, etc.).