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Carey Olsen Guernsey's autumn conference urged caution over reliance on 'Anti-Bartlett' clauses.
'Anti-Bartlett' clauses remain a useful tool in trust structuring but should not be seen as providing infallible protection for trustees, according to Carey Olsen trusts and private wealth partner Natasha Kapp.
Speaking at the firm's Guernsey autumn trust conference, Natasha referenced the recent Hong Kong Court of Appeal decision in Zhang Hong Li and others v DBS (Hong Kong) Ltd and others, which held a professional trustee was in breach of trust in failing to intervene in an underlying company's investment decisions despite the incorporation of 'anti-Bartlett' provisions in the trust instrument.
"Where assets in trusts are financial investments held through underlying companies, trustees should consider the scope of their existing 'Anti-Bartlett' provisions and reflect whether there may be room for this to be widened," said Ms Kapp. "For example, it is possible in certain cases to expressly disclaim liability for withholding approval for investments recommended by an investment adviser."
"However, what is important to stress is that we shouldn't throw out 'Anti-Bartlett' clauses when structuring a trust because there is still an important difference between a trustee discharging a high level supervisory role in respect of trust assets and involving themselves deeply in the day-to-day management and oversight of those assets – the two are not the same."
What a trustee needs to ask is whether they are actively taking steps in understanding the matters for which they are ultimately responsible.
"The nature of the high level supervisory role will always be fact-specific and dependent. It will involve making appropriate enquiries, carrying out an analysis and, in some cases, challenging and overriding decisions or proposed decisions in connection with investments put before it."
"When considering the structuring of a trust and the risk involved in taking on a trusteeship, 'Anti-Bartlett' provisions still remain a tool that are able to meet the needs of settlors and beneficiaries, and also protect trustees to a certain extent. However, such clauses should not be seen as providing infallible protection for trustees."
Pictured top: Natasha Kapp.
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