Trustee Amendment Act 1999

Link to law: http://www.bermudalaws.bm/Laws/Annual%20Laws/1999/Acts/Trustee%20Amendment%20Act%201999.pdf

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Trustee Amendment Act 1999
TRUSTEE AMENDMENT ACT 1999

1

BERMUDA
1999 : 19

TRUSTEE AMENDMENT ACT 1999

[Date of Assent 1 July 1999]

[Operative Date 10 July 1999]

WHEREAS it is expedient to amend the Trustee Act 1975:

Be it enacted by The Queen's Most Excellent Majesty, by and
with the advice and consent of the Senate and the House of Assembly of
Bermuda, and by the authority of the same, as follows:

Short title, commencement and application
1 (1) This Act may be cited as the Trustee Amendment Act 1999.

(2) Subject to section 2(2), this Act shall come into force on
such day as the Minister of Finance may appoint by notice published in
the Gazette.

(3) This Act shall apply to all trusts, whether created before or
after the coming into force of this Act.

Meaning of "trust corporation"
2 (1) In section 1 of the Trustee Act 1975 ("the Act"), in
paragraph (a) of the definition of "trust corporation", for the words
"entitled under the rules made under the Administration of Estates Act
1974 to act as trustee" there shall be substituted "licensed as a trust
company under the Trust Companies Act 1991".

TRUSTEE AMENDMENT ACT 1999

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(2) The amendment in subsection (1) shall be deemed to have
come into force in accordance with section 30 of the Trust Companies
Act 1991 (that is to say, on 6th September 1991 or, in the case of a
company carrying on trust business immediately before that day, on 6th
September 1992); and, accordingly, anything done during the validation
period by a trust company purporting to act as a trust corporation under
the Trustee Act 1975 shall be deemed to have been validly done at the
time it was done.

(3) For the purposes of subsection (2)

"trust company" means a company licensed as a trust company
under the Trust Companies Act 1991;

"the validation period" means the period between the coming
into force of the Trust Companies Act 1991 and the coming
into force of this section.

Delegation
3 (1) Section 15 of the Act (power to employ agents) is repealed
and the following is substituted:

"Power to delegate certain functions by estate
representatives
15 (1) This section is subject to the terms of the
will, if any.

(2) Estate representatives may delegate all or
any of their functions as estate representative to—

(a) a delegate; or

(b) one of the estate representatives (a "co-
estate representative"),

and may pay such delegate or co-estate representative
out of the property of the estate, whether income or
capital or partly each as they may think fit.

(3) Subsections 15A(3) and (4) apply, with the
necessary changes, to the exercise of the power of
delegation under subsection (2).".

(2) After that section there shall be inserted—

"Power to delegate certain functions by trustees
15A (1) This section and section 15B are subject to
the terms of the trust, and without prejudice to any of
the powers conferred by sections 17 and 24.

TRUSTEE AMENDMENT ACT 1999

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(2) Trustees of a trust may delegate any or all
of their delegable functions to—

(a) a delegate; or

(b) one of the trustees (a "co-trustee"),

and may pay such delegate or co-trustee out of the trust
property, whether income or capital or partly each as
they may see fit.

(3) In exercising any power to delegate, and in
supervising the delegate, the trustees shall exercise
reasonable care, skill and caution.

(4) Delegation under this section to a delegate,
but not to a co-trustee, may be made on terms which—

(a) limit the liability of the delegate;

(b) do not prohibit actual or potential
conflicts of interest in dealing with the
trust property; or

(c) permit sub-delegation, including on
such terms as are mentioned in
paragraphs (a) and (b);

and the trustees shall not, by reason of delegating on
such terms, be responsible for the act or default of any
delegate or sub-delegate, provided that the trustees
honestly believed delegation to that delegate on those
terms to be in the best interests of the trust as a whole.

(5) In this section "trustee" does not include an
estate representative.

Meaning of "delegable functions"
15B (1) For the purposes of section 15A, "delegable
functions" shall be interpreted in accordance with this
section.

(2) Functions of an administrative or
managerial nature (including discretionary investment
powers) are delegable functions.

(3) The following functions are not delegable—

(a) the formulation of policy criteria
governing the investment or other
application of trust property, and any

TRUSTEE AMENDMENT ACT 1999

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decision as to the amount of money that
may be raised on the security of trust
property;

(b) the exercise of any discretionary duties
or powers concerning distribution of
income or capital to, or use of the trust
property by, persons beneficially
interested under the trust, or the
appropriation of trust property in
satisfaction of a beneficiary's entitlement
to any capital;

(c) the exercise of any power to determine
or to alter any interest of a person
beneficially interested under the trust,
including a power to deal with income or
capital expenditure or receipts as if they
were not of such income or capital
nature and a power to bring forward or
postpone the closing date for the total or
partial termination of the trust;

(d) the exercise of any power to add a
person or class of persons to, or exclude
a person or class of person from, those
who are beneficially interested under the
trust;

(e) the exercise of any power to add to,
revoke or vary the administrative powers
under the trust or to release or restrict
any powers under the trust;

(f) the exercise of any power to appoint or
remove trustees;

(g) the exercise of any power to change the
proper law governing the validity,
administration or any other severable
aspect of the trust.".

Amends section 17
4 Section 17(1) of the Act (power to delegate trusts during absence
abroad) is amended by deleting the words "for a period exceeding two
weeks".

TRUSTEE AMENDMENT ACT 1999

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Liability of trustees
5 In section 22(1) of the Act (trustee not liable for loss except where
arising through his wilful default) for the words "wilful default" there
shall be substituted "deliberate, reckless or negligent breach of an
equitable duty".

Remuneration of trust corporations
6 After section 22 of the Act there shall be inserted—

"Remuneration of trust corporations
22A Subject to—

(a) any contrary intention in the terms of the trust; or

(b) any order of a court,

a trust corporation shall be entitled to reasonable remuneration
for its services as trustee, in addition to reimbursement of its
expenses under section 22(2).".

Clarification of power of advancement
7 At the end of section 24 of the Act (power of advancement) there
shall be added—

" (4) For the avoidance of doubt, when exercising the
power of advancement the trustees may—

(a) create any provisions, including

(i) discretionary trusts and dispositive,
administrative or managerial powers
exercisable by any person; and

(ii) the delegation of discretions and duties
to any person; and

(b) provide that the capital money may become
subject to the terms of any other trust,

provided that the requirements of subsection (1) are satisfied.".

Replacement of trustees
8 (1) Sections 27(c) and 29(1) of the Act are amended by deleting
the word "either" appearing before "a trust corporation" and by inserting
after "corporation" the words ", any other body corporate, wherever
incorporated, with power to act as a trustee".

TRUSTEE AMENDMENT ACT 1999

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Managing trustees
9 After Part III of the Act (appointment and discharge of trustees)
there shall be inserted—

"PART III A

MANAGING TRUSTEES

Managing trustees
30A A trust instrument may contain provisions by virtue of
which the exercise of any of the trustees' powers may be reserved
to a managing trustee, and no other trustee is liable for any of
the decisions, acts or transactions of the managing trustee in so
far as they amount to exercise of powers reserved by the trust
instrument to the managing trustee.".

Investment powers
10 (1) For Part V of the Act (investments) and the First Schedule
thereto there shall be substituted—

"PART VA

INVESTMENTS

Investment powers
55A (1) A trustee's power of investment under this section
shall be subject to any enlargement or restriction of his powers
of investment set out in the instrument creating the trust.

(2) Nothing in this section shall restrict the powers of
the court under section 47.

(3) A trustee may invest or otherwise apply trust
property in the purchase or acquisition of property of any kind,
whether or not situated in Bermuda, whether or not income-
producing, with or without security, and whether for the purpose
of—

(a) receiving an appropriate total return from income
and capital appreciation;

(b) controlling or limiting risk; or

(c) benefiting persons interested in any way whatsoever
in the income produced by trust property;

or for a mixture of such purposes.

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(4) In so investing or otherwise applying trust property,
a trustee shall act as a prudent investor would, by considering
the purposes, terms, distribution requirements and other
circumstances of the trust and by exercising reasonable care,
skill and caution.

(5) In determining whether a trustee has acted in
accordance with this section, any decision to invest or otherwise
apply trust property shall be evaluated in the context of the trust
property as a whole and as part of an overall investment strategy
having risk and return objectives reasonably suited to the
trust.".

(2) In section 49(1) of the Administration of Estates Act 1974
(authorised investment of infant's property) for the words "the Trustee
Act 1975" there shall be substituted "Part VA of the Trustee Act 1975".

(3) The substitution for Part V of the Trustee Act (that is
sections 55 to 63 of, and the First Schedule to, that Act which impose
restrictions on investments and are superseded by Part VA) shall not
affect the following enactments which authorise investment in
accordance with the Trustee Act 1975—

(a) section 2 of the Bermuda Nursing Association Act 1957;

(b) section 13 of the Credit Unions Act 1974;

(c) section 11 of the Deposit Companies Act 1974;

(d) section 26 of the Condominium Act 1986;

(e) section 6 of the Millennium Fund Act 1998;

(f) rule 48 of the Bermuda Housing Association (Model
Rules) Regulations 1982;

(g) Order 22, rule 13 of the Rules of the Supreme Court
1985;

nor shall it affect any other enactments which specifically authorise
investment in accordance with Part V of the Trustee Act 1975.