Trustees: Qualification, Powers, Duties, Liability and Removal

Scope of the chapter. The trustee holds the trust property, makes the decisions the trust deed commits to it, answers to the beneficiaries and to the Court, and stands between the trust and every creditor or foreign court that would reach the property. The Nevis International Exempt Trust Ordinance says who may hold that office, how a trustee is appointed and removed, what powers it has where the deed is silent, what it may and may not be excused from, and what happens to it when a foreign court acts against it. Nevis International Exempt Trust Ordinance, Cap. 7.03(N), §§ 2, 10, 16–24, 32–42, 48, 50–51 (rev. ed. 2017) ("NIETO"). This chapter examines those rules. It treats the trustee's qualifications (¶ 710) and the licensing law that governs trustees who act for reward (¶ 720); appointment, retirement and removal (¶ 730); the trustee's powers (¶ 740) and duties (¶ 750); exoneration and indemnity clauses and the protection of directed trustees (¶ 760); liability for breach and the remedies against a trustee (¶ 770); the trustee's position when a foreign court or a creditor applies pressure, and the trustee's right to the Court's directions (¶ 780); and the trustee's records, filings and remuneration (¶ 790).

The statutory method. The Ordinance does not codify the law of trustees. It states a limited number of rules in its own words and leaves the rest to the general law of trusts, which in Nevis is English equity received through the Federation's reception provisions and developed by the Eastern Caribbean courts and the Privy Council (see supra ch. 2). Two provisions set the frame. The first defines a breach of trust as "the violation, omission, neglect or failure of any duty imposed on a trustee by this Ordinance or by the terms of the international trust." NIETO § 2. The second, inserted in 2015, allows the trust deed to "expand, restrict, eliminate, or otherwise vary" a trustee's "powers, duties, standard of care, rights of indemnification and liability," subject to a floor: no exculpation or indemnity for the trustee's own wilful misconduct. Id. § 40(1)–(2). Read together, they make the deed the main source of the trustee's obligations. The general law fills gaps and the Ordinance fixes the floor.

Features peculiar to Nevis. Several of the Ordinance's trustee provisions have no close equivalent in English law. They shape how a Nevis trust is drafted and run:

1. At least one trustee must be a Nevis corporation, Nevis limited liability company, Nevis-licensed trust company, licensed Nevis attorney, or Nevis multiform foundation. Id. § 2 (definition of "international trust").
2. A trustee against whom a foreign court fails to dismiss an action, or which a foreign court orders to act in relation to the trust, ceases to be trustee immediately and without any further order. Id. § 38(1).
3. Every person holding a power under the trust is directed to ignore demands made under compulsion or legal process. Id. § 16.
4. An action against a trustee for breach of trust must be commenced in the Court within two years of the breach. Id. § 50(1)(c).
5. A trustee may not invest outside the deed's authority or investments approved by the protector, and if the deed incorporates the statutory list, the First Schedule's narrow list applies. Id. § 51.
6. A trustee directed by a protector is not liable for following the direction except for wilful misconduct, and owes no duty to monitor the protector. Id. § 10(4), (6).

Licensing and regulation. A trustee that acts for profit or reward carries on "trust business" and needs a licence under the Nevis Trust and Corporate Service Providers Ordinance, No. 2 of 2021. That Ordinance is examined in chapter 4 (see supra ch. 4). This chapter states only the points a trustee and its client must plan around (¶ 720).

Related chapters. The creation of a trust and its validity are treated in chapter 6, beneficiaries' interests in chapter 8, protectors and reserved powers in chapter 9, and changes of trustee that accompany a migration in chapter 11 (see infra chs. 8, 9, 11). The trustee's position in creditor litigation is treated in Part V: fraudulent dispositions in chapter 21, the creditor's bond in chapter 22, foreign judgments in chapter 23, litigation in Nevis in chapter 24, and the trustee's exposure before foreign courts in chapter 25 (see infra chs. 21–25).