Tag Archives: Trust Appointer

Thinking out of the box with the Executive Entity Act

open-box

Due to the recently implemented Bahamian Executive Entity Act, financial service providers have the ability to act in the capacity of Trustee, Protector, Investment Advisor and or Appointor for existing and new trusts under consideration.  Section 2. of the Bahamas Executive Entity Act provides for the functions following:

  • Any powers and duties of an executive, administrative, supervisory, fiduciary and office holding nature including but not limited to the powers and duties of:-

(I)        an enforcer, protector, trustee, investment advisor and holder of any other office                of any trust

(II)       the holder of any office of any legal person

  • The ownership, management, and holding of:-

(I)        executive entity assets; and

(II)       trust assets

The use of an Executive Entity is most apparent when clients have decided to transfer trusteeship from one service provider to another and an interim trustee is required to facilitate the transfer.

If a trustee is removed or retired by Deed of Removal/Retirement and Appointment, the Executive Entity is able to be appointed as interim trustee.  This allows the Settlor/Donor the ability to discern and appoint a successor trustee at their convenience.

If the Executive Entity is also a Corporate Service Provider, arguably the Executive Entity is possible of providing the same level of service offered by trust companies and where feasible, maintain the same investments and  bank accounts that were previously managed by the successor trustee.

The Executive Entity Act is a fantastic fiduciary tool that provides flexibility when formulating custom solutions.

“The Trust Protector”

Trust Protector

“Captain Trust Protector” Illustration by M. Collins

 

The words “Trust Protector” conjures images of a person who swoops in to rescue a beneficiary in distress from an om onus trustee. However in reality, it’s the trustee that relies most frequently on the protector.

The protector is usually a close friend or associate of the settlor who has an intimate understanding of the family’s dynamics.  More importantly, the protector provides a means by which the trustee can add further value to the administration of the trust. E.g.  If a protector has not been appointed, the trustee is significantly deprived due to its inability to vary the trust so that it mirrors the current objectives of the beneficiaries.

In the absence of a protector, the trustee is usually compelled to seek direction from the courts. This process is not only time consuming but expensive and provides no guarantee that a decision will be made in favour of the beneficiaries.

The discretionary powers that are frequently subject to the protector’s consent are as follows:

  • Trusts of Income & Capital
  • Power of Appointment
  • Power to Transfer to Other Trusts
  • Power to Vary the Terms of  the Trust
  • Addition to the Class of Beneficiaries
  • Exclusion from the Class of Beneficiaries
  • Power to Change Governing Law
  • Power to Vary the Trust Period
  • Removal and Appointment of the Trustee

For settlors domiciled in civil law jurisdictions, the notion of an irrevocable trust proves difficult to conceptualize. The ability to appoint a close family friend as protector is frequently the compelling feature that closes “the deal” on an Asset Protection Trust (APT).

With a protector appointed, the settlor receives the tax and succession benefits of a discretionary trust, as well as the flexibility of a directed trust. These attributes make the trust protector a fundamental component of the modern trust instrument.

Have you appointed a protector for your directed trust in the event of disability or death?  Has your asset protection trust been difficult to administer because a protector has not been appointed?