Trust Act of 1994
TITLE 50 – TRUSTS
CHAPTER 1 - TRUST ACT
sRepublic of the Marshall Islands
Jepilpilin Ke Ejukaan
TRUST ACT OF 1994
Arrangement of Sections
Section Page
PART I - PRELIMINARY 5
§101. Short Title. ............................................................................................................................. 5
§l0lA. Definitions. ............................................................................................................................ 5
§102. Creation of a Trust. ............................................................................................................... 9
§103. Existence of a trust. .............................................................................................................. 9
§104. Property which may be placed in a trust. ......................................................................... 9
§105. Transfer of property to a trust. ......................................................................................... 10
§106. Beneficiaries of a trust. ....................................................................................................... 10
§107. Validity of a Trust. .............................................................................................................. 11
§108. Duration of a trust. ............................................................................................................. 12
§109. Employer trusts. ................................................................................................................. 12
PART II TRUSTEES 13
§110. Number of trustees. ............................................................................................................ 13
§111. Appointment out of Court of new or additional trustee. ............................................. 13
§112. Resignation or removal of trustee. ................................................................................... 13
§113. Position of continuing trustees on reduction in number of trustees. .......................... 14
§114. Duties of trustee. ................................................................................................................. 14
§115. Duty of co-trustees to act together. .................................................................................. 15
§116. Impartiality of trustee. ....................................................................................................... 15
§117. Powers of trustee. ............................................................................................................... 16
§118. Delegation by trustee. ........................................................................................................ 16
§119. Remuneration and expenses of trustee. .......................................................................... 17
§120. Power to appropriate. ........................................................................................................ 17
§121. Corporate trustee acting by resolution. ........................................................................... 17
§122. Trustee may refuse to make disclosure. ......................................................................... 17
§123. Liability for breach of trust. .............................................................................................. 18
§124. Trustee acting in respect of more than one trust. .......................................................... 20
§125. Dealings by trustee with other Parties. ........................................................................... 20
§126. Constructive trustee. .......................................................................................................... 20
§127. Position of outgoing trustee. ............................................................................................ 21
§128. Class interest. ...................................................................................................................... 21
§129. Power to provide for variation of terms of trust. .......................................................... 22
§130. Power of accumulation and advancement. .................................................................... 22
§131. Power of appointment. ...................................................................................................... 23
§132. Power of revocation. .......................................................................................................... 23
§133. Power to lease. .................................................................................................................... 24
§134. Power to mortgage or pledge or borrow money. .......................................................... 24
§135. Failure or lapse of interest. ............................................................................................... 24
§136. Termination of a trust. ....................................................................................................... 25
PART III - APPLICATION OF MARSHALL ISLANDS LAW TO A TRUST. 26
§137. Recognition of a trust by the law of The Republic of the Marshall Islands. .............. 26
§138. Governing Law. .................................................................................................................. 26
§139. Matters determined by governing law. .......................................................................... 26
§140. Exclusion of foreign law. .................................................................................................. 28
§141. Change of Governing Law................................................................................................ 28
§142. Spendthrift or protective trust. ........................................................................................ 29
§143. Heirship rights.................................................................................................................... 30
§144. Retention of control and benefits by settlor. .................................................................. 30
§145. Fraudulent conveyance. .................................................................................................... 31
§146. Commencement of proceedings. ..................................................................................... 33
§147. Bankruptcy of the settlor. .................................................................................................. 35
PART IV POWERS OF THE COURT 35
§148. Jurisdiction of court. .......................................................................................................... 35
§149. Appointment by the Court of trustee. ............................................................................. 36
§150. Power to authorize remuneration. .................................................................................. 36
§151. Powers of new trustee appointed by the Court. ............................................................ 36
§152. Power to relieve trustee from personal liability. ........................................................... 36
§153. Power to make beneficiary indemnify for breach of trust. .......................................... 37
§154. Variation of terms of a trust by the Court and approval of particular
transactions. ........................................................................................................................ 37
§155. Application to and certain powers of the Court. ........................................................... 38
§156. Payment of costs................................................................................................................. 39
§157. Nature of trustee’s estate, following trust property and insolvency of trustee. ....... 39
§158. Protection of persons dealing with trustee. .................................................................... 40
§159. Limitation of actions or prescription. .............................................................................. 40
PART V REGISTRATION OF TRUSTS 41
§160. Application for registration. ............................................................................................. 41
§161. Registration. ........................................................................................................................ 41
§162. Annual certificate of registration. .................................................................................... 42
§163. Registration of trust instrument. ...................................................................................... 42
§164. Registered office. ................................................................................................................ 43
§165. Proceedings by or against a trust. .................................................................................... 43
PART VI MISCELLANEOUS 43
§166. Reserved.[P.L 1994-109, §66, previous section “Appointment of Registrar”
eliminated by P.L. 1997-53, §2.] ........................................................................................ 43
§167. Application of this Chapter............................................................................................... 43
§168. Resident Beneficiaries. ....................................................................................................... 44
§169. Confidentiality. ................................................................................................................... 44
§170. Immunity from liability and suit. ..................................................................................... 44
l Page 5
TITLE 50 – TRUSTS
CHAPTER 1 - TRUST ACT
sRepublic of the Marshall Islands
Jepilpilin Ke Ejukaan
TRUST ACT OF 1994
AN ACT to allow for the creation and registration of Marshall Islands trusts and to
provide for the governance thereof.
Commencement: October 10, 1994
Source: P.L. 1994-109
Amended By: P.L. 1997-37 P.L. 1997-53 P.L. 2010-41
PART I - PRELIMINARY
§101. Short Title.
This Chapter may be cited as the Trust Act of 1994. [P.L. 1994-109, §1.]
§l0lA. Definitions.
(1) In this Chapter, unless the context otherwise requires, the term:
(a) “beneficiary” means a person entitled to benefit under a trust
or in whose favor a discretion to distribute property held on
trust may be exercised;
(b) “breach of trust” means a breach of any duty imposed on a
trustee by this Chapter or by the terms of the trust;
(c) “corporation” means a body corporate wherever incorporated;
Page 6 r
(d) “Court” means The High Court of the Republic of the Marshall
Islands; “dispose and disposition” in relation to
property includes:
(i) every form of conveyance transfer assignment sale gift
lease license easement profit mortgage charge pledge
encumbrance or other transaction absolute or limited by
which any legal or equitable interest in property is
created, transferred or extinguished;
(ii) the disposal of an interest in or right over property by
the exercise of a power of appointment, power of
maintenance, power of advancement or other authority:
and also includes the conferring or variation or
surrender of such powers or authority;
(iii) a contract to make any such disposition referred to in
paragraph (i) or (ii);
(e) “foreign trust” means a trust whose proper law is the law of
some jurisdiction other than the Republic of the Marshall
Islands;
(f) “insurance” includes assurance:
(g) “interdict” means a person, other than a minor, who under the
law of the Marshall Islands or under the law of his domicile
does not have legal capacity, (h) “Marshall Islands” means
The Republic of The Marshall Islands;
(i) “Marshall Islands trust” means a trust or disposition
which is registered under this Chapter and in respect of
which:
(i) at least one of the trustees is licensed in the Republic of
the Marshall Islands and is either:
(A) a foreign corporation registered in the Marshall
Islands; or
(B) a Marshall Islands corporation; or
(C) a trustee company; and
(ii) the beneficiaries are non-resident; and
(ii) whose proper law is the law of the Marshall Islands;
l Page 7
(j) “minor” means a person who under the law of his domicile
has not reached the age of legal capacity;
(k) “person” includes any natural person, partnership, association
or corporation. singly or jointly with others, and without
regard to his or their nationality, residence, domicile,
jurisdiction of incorporation, establishment, or creation.
(l) “personal representative” means the executor or
administrator for the time being of a deceased person and, in
the context of a Marshall Islands trust, includes the principal
heir;
(m) “power of appointment” includes a discretionary power to
transfer, grant or create a beneficial interest in property, with
or without the furnishing of valuable consideration by the
beneficiary of the power, including a power, the exercise of
which is subject to the consent of a third party;
(n) “property” means property of any description wherever
situated, and, in relation to rights and interests includes those
rights and interests whether vested, contingent, defeasible or
future, excluding Marshall Islands real property governed by
customary and traditional law;
(o) “protector” in relation to a trust means a person who is the
holder of a power which when invoked is capable of directing
a trustee in matters relating to the trust and in respect of which
matters the trustee has a discretion and includes a person who
is the holder of a power or appointment or dismissal of
trustees;
(p) registrar” means the Majuro International Trust Company. The
Majuro International Trust Company shall appoint such
deputy registrars outside of the Republic as it deems
appropriate;
(q) “settlor” means a person who provides trust property or
makes a testamentary disposition on trust or to a trust;
(r) “terms of a trust” means the written or oral terms of a trust,
and also means any other terms made applicable by the proper
law;
Page 8 r
(s) “transfer” in relation to stock or securities, includes the
performance and execution of every deed, power of attorney,
act and thing on the part of the transferor to effect and
complete the title in the transferee;
(t) “trust” includes :
(i) the trust property; and
(ii) the rights, powers, duties, interests, relationships and
obligations under a trust;
(u) “trust property” means the property for the time being held in
a trust;
(v) “trust corporation” means a body corporate incorporated
pursuant to the provisions of 52 MIRC, Chapter 2, “ Corporate
Formation Act”, with a registered office in the Marshall
Islands or a body corporate registered as a foreign entity
pursuant to 52 MIRC Ch 5, “Foreign Entities Act”, and in both
cases holding a license to carry on trust business granted
pursuant to the Trust Companies Act.
(w) “unit trust” means any trust established for the purpose, or
having the effect, of providing, for persons having funds
available for investment, beneficiaries under the trust, in any
profits or income arising from the acquisition, holding,
management or disposal of any property whatsoever.
(2) Where in this Chapter there is a reference to a Section by number
only, and without further identification, such reference shall be
construed as a reference to the Section of that number contained in
this Chapter.
(3) Where in any Section or other division of this Chapter there is a
reference to a Part, paragraph, sub-paragraph or clause by number or
letter only, and without further identification, such reference to the
Part, paragraph, sub-paragraph or clause of that number or letter
contained in the Section or other division of this Chapter in which
such reference occurs.
(4) Unless the context otherwise requires, where this Chapter refers to
any enactment, the reference is a reference to that enactment as
l Page 9
extended or applied by or under any other enactment, including any
other provision of that enactment.
(5) As used in this Chapter, unless it is otherwise provided or the context
requires a different construction, application or meaning:
(a) words importing the singular include and apply to several
persons, parties or things;
(b) words importing the plural include the singular;
(c) words importing the masculine gender include the
feminine; and
(d) words used in the present tense include the future. [P L. 1994-
109, §1: the term “registrar” amended by P.L. 1997-37, §2.][The provisions of subsection(1) herein re-numbered to conform to the format of the Code (Rev.2003)]
§102. Creation of a Trust.
(1) A trust may come into existence in any manner including, but not
limited to:
(a) an oral declaration; or
(b) an instrument in writing (including a will or codicil); or
(c) by conduct. [P.L. 1994-109, §2.]
§103. Existence of a trust.
A trust exists where a person (known as a trustee) holds or has vested him
or is deemed to hold or have vested in him property (of which he is not the
owner in his own right):
(a) for the benefit of any person (known as a beneficiary) whether
or not yet ascertained or in existence; and/or
(b) for any purpose which is not for the benefit only of the trustee.[P.L. 1994-109, §3.]
§104. Property which may be placed in a trust.
Subject to paragraph (2) of Section 107 and to the customary and traditional
laws regarding ownership of land in the Marshall Islands:
(a) any property may be held by or vested in a trustee upon trust;
and
Page 10 r
(b) a trustee may accept from any person property to be added to
the trust property. [P.L. 1994-109, §4.]
§105. Transfer of property to a trust.
If a person domiciled outside of the Marshall Islands transfers or disposes of
property during his lifetime to a trust :
(a) he shall be deemed to have had capacity to do so if he is at the
time of such transfer or disposition of full age and of sound
mind under the law of his domicile: and
(b) no rule relating to inheritance or succession (including forced
heirship or similar rights) of the law of his domicile or any
other system of law shall affect any such transfer or
disposition or otherwise affect the validity of such trust. [P.L 1994-109, §5.]
§106. Beneficiaries of a trust.
(1) A beneficiary shall be:
(a) identifiable by name; or
(b) ascertainable by reference to :
(i) a class; or
(ii) a relationship to some person whether or not living at
the time of the creation of the trust or at the time which
under the terms of the trust is the time by reference to
which members of a class are to be determined.
(2) The terms of a trust may provide for the addition of a person as a
beneficiary or the exclusion of a beneficiary from benefit.
(3) Subject to paragraph (4) of Section 127, the terms of a trust may
impose upon a beneficiary an obligation as a condition for benefit.
(4) A beneficiary may disclaim his whole interest.
(5) A disclaimer under paragraph (4) shall be irrevocable.
(6) Subject to the terms of the trust, a beneficiary may disclaim part of his
interest, whether or not the beneficiary has received some benefit
from his interest.
l Page 11
(7) A disclaimer shall be in writing.
(8) Subject to the terms of the trust, a disclaimer made under paragraph
(6) may be temporary and, if so provided in the writing effecting the
disclaimer, shall be capable of revocation in the manner and, under
the circumstances mentioned in the trust instrument or referred to
therein.
(9) The interest of a beneficiary shall constitute moveable property.
(10) Subject to the terms of the trust, a beneficiary may sell, pledge, charge
or otherwise deal with his interest in any manner.
(11) A settlor or a trustee of a trust may also be a beneficiary of the trust.[P.L 1994-109, §6.]
§107. Validity of a Trust.
(1) Subject to paragraphs (2) and (3), a trust shall be valid and
enforceable in accordance with its terms.
(2) A trust shall be invalid:
(a) to the extent that:
(i) it purports to do anything the doing of which is
contrary to the law of the Marshall Islands; or
(ii) it purports to confer any right or power or impose any
obligation the exercise or carrying out of which is
contrary to the law of the Marshall Islands; or
(iii) it purports to apply directly to immoveable property
situated in the Marshall Islands; or
(iv) it is created for a purpose in relation to which there is
no beneficiary, not being a charitable purpose;
(b) to the extent that the Court declares that:
(i) the trust was established by duress, fraud, mistake,
undue influence or misrepresentation; or
(ii) the trust is immoral or contrary to public policy; or
(iii) the terms of the trust are so uncertain that its
performance is rendered impossible.
Page 12 r
(3) Where a trust is created for two or more purposes of which some are
lawful and others are unlawful:
(a) if those purposes cannot be separated the trust shall be invalid;
(b) where those purposes can be separated the Court may declare
that the trust is valid as to the purposes which are lawful.
(4) Where a trust is partially invalid the Court may declare what
property is trust property, and what property is not trust property.
(5) Where clause (iii) of sub-paragraph (a) of paragraph (2) applies, any
person in whom the title to such immoveable property is vested shall
not be deemed to be, a trustee of such immoveable property.
(6) Property as to which a trust is wholly or partially invalid shall,
subject to paragraph (5) and subject to any order of the Court, be held
by the trustee in trust for the settlor absolutely or if he is dead for his
personal representative.
(7) In paragraph (6) “Settlor” means the particular person who provided
the property as to which the trust is wholly or partially invalid.
(8) An application to the Court may be made by:
(a) the Attorney-General;
(b) the trustee:
(c) a beneficiary; or
(d) any person with leave of the Court. [P.L. 1994-109, §7.]
§108. Duration of a trust.
(1) Subject to paragraph (2) and Section 109, a trust may continue until
the one hundredth anniversary of the date on which it came into
existence and if not sooner terminated shall then terminate.
(2) Paragraph (1) shall not apply to a trust for a charitable purpose.[P.L. 1994-109, §8.]
§109. Employer trusts.
A trust created by an employer as part of a stock bonus, pension, disability,
death benefit or profit sharing plan for the benefit of some or all of his
employees, to which contributions are made by the employer or employees,
l Page 13
or both, for the purpose of distributing to the employees the earnings or the
principal, or both earnings and principal, of the fund held in trust, shall be
exempted from the application of Section 108 paragraph (1), and may
continue in perpetuity or for such time as may be necessary to accomplish
the purpose for which it is created. [P.L. 1994-109, §9.]
PART II TRUSTEES
§110. Number of trustees.
(1) Subject to the terms of a trust, the number of trustees shall not be less
than two, unless only one trustee was originally appointed.
(2) Where there is no trustee or less than the number required under
paragraph (1) a trust shall not fail on that account. [P.L. 1994-109,§10.]
§111. Appointment out of Court of new or additional trustee.
(1) Where the terms of a trust contain no provision for the appointment
of a new or additional trustee the trustees for the time being or the
last remaining trustee or the personal representative or the liquidator
of the last remaining trustee may appoint a new or additional trustee.
(2) Subject to the terms of the trust, a trustee appointed under this
Section shall have the same powers, discretions and duties and may
act as if he had been originally appointed a trustee.
(3) A trustee having power to appoint a new trustee who fails to exercise
such power may be removed from office by the Court.
(4) On the appointment of a new or additional trustee anything requisite
for vesting the trust property in the trustees for the time being of the
trust shall be done. [P.L. 1994-109, §11.]
§112. Resignation or removal of trustee.
(1) Subject to paragraph (3), a trustee, not being a sole trustee, may
resign his office by notice in writing delivered to his co-trustees.
(2) A resignation takes effect on the delivery of notice in accordance with
paragraph (1).
Page 14 r
(3) A resignation:
(a) given in order to facilitate a breach of trust; or
(b) which would result in there being no trustee or fewer than the
number of trustees required under paragraph (1) of
Section 110, shall have no effect.
(4) A trustee shall cease to be a trustee of the trust immediately upon -
(a) his removal from office by the Court; or
(b) his resignation becoming effective; or
(c) notwithstanding any other provision of this Section, approval
by the Court of his petition to resign; or
(d) the coming into effect of a provision in the terms of a trust
under which he is removed from office or otherwise ceases to
hold his office.
(5) A person who ceases to be a trustee under this Section shall concur in
executing all documents necessary for the vesting of the trust
property in the new or continuing trustees. [P.L. 1994-109, §12.]
§113. Position of continuing trustees on reduction in number of trustees.
Subject to the terms of the trust, where the number of trustees falls below
the minimum number required under paragraph (1) of Section 110, the
required number of new trustees shall be appointed and until such
minimum number is reached the surviving or continuing trustees shall act
only for the purpose of preserving the trust property. [P.L. 1994-109, §13.]
§114. Duties of trustee.
(1) A trustee shall in the execution of his duties and in the exercise of his
powers and discretions;
(a) act:
(i) with due diligence;
(ii) as would a prudent person; and
(iii) to the best of his ability and skills.
(b) observe the utmost good faith.
l Page 15
(2) Subject to this Chapter, a trustee shall carry out and administer the
trust in accordance with its terms.
(3) Subject to the terms of the trust, a trustee shall:
(a) so far as is reasonable preserve the value of the trust property;
(b) so far as is reasonable enhance the value of the trust property.
(4) Except:
(a) with approval of the Court; or
(b) as permitted by this Chapter or expressly provided by the
terms of the trust; a trustee shall not:
(i) directly or indirectly profit from his trusteeship; or
(ii) cause or permit any other person to profit directly or
indirectly from such trusteeship; or
(iii) on his own account enter into any transaction with the
trustees or relating to the trust property which may
result in such profit.
(5) A trustee shall keep accurate accounts and records of his trusteeship.
(6) A trustee shall keep trust property separate from his personal
property and separately identifiable from any other property of
which he is a trustee. [P.L. 1994-109, §14.]
§115. Duty of co-trustees to act together.
(1) Subject to the terms of the trust, where there is more than one trustee
all the trustees shall join in performing the trust.
(2) Subject to paragraph (3), where there is more than one trustee no
power or discretion given to the trustees shall be exercised unless all
the trustees agree on this exercise.
(3) The terms of a trust may empower trustees to act by a majority but a
trustee who dissents from a decision of the majority of the trustees
may require his dissent to be recorded in writing. [P.L. 1994-109, §15.]
§116. Impartiality of trustee.
Subject to the terms of the trust, where there is more than one beneficiary, or
more than one charitable purpose, or at least one beneficiary and at least one
Page 16 r
charitable purpose, a trustee shall be impartial and shall not execute the
trust for the advantage of one at the expense of another. [P.L. 1994-109, §16.]
§117. Powers of trustee.
(1) Subject to the terms of the trust and subject to his duties under this
Chapter, a trustee shall in relation to the trust property have all the
same powers as a natural person acting as the beneficial owner of
such property.
(2) A trustee shall exercise his powers only in the interests of the
beneficiaries and in accordance with the terms of the trust.
(3) The terms of a trust may require a trustee to obtain the consent of
some other person before exercising a power or a discretion.
(4) A person who consents as provided in paragraph (3) shall not by
virtue of so doing be deemed to be a trustee. [P.L. 1994-109, §17.]
§118. Delegation by trustee.
(1) A trustee shall not delegate his powers unless permitted to do so by
this Chapter or by the terms of the trust.
(2) Except where the terms of the trust specifically provide to the
contrary, a trustee:
(a) may delegate management of trust property to and employ
investment managers whom the trustee reasonably considers
competent and qualified to manage the investment of trust
property; and
(b) may employ accountants, advocates, attorneys, bankers,
brokers, custodians, investment advisers, nominees, property
agents, solicitors and other professional agents or persons to
act or advise in relation to any of the affairs of the trust or to
hold any of the trust property.
(3) A trustee shall not be liable for any loss to the trust arising from a
delegation or appointment under paragraph (2) who, in good faith
and without neglect, makes such delegation or appointment or
permits the continuation thereof.
l Page 17
(4) A trustee may authorize a person referred to in paragraph (2) to
retain any commission or other payment usually payable in relation
to any transaction. [P.L. 1994-109, §18.]
§119. Remuneration and expenses of trustee.
(1) Unless authorized by:
(a) the terms of the trust; or
(b) the consent in writing of all of the beneficiaries; or
(c) any order of the Court; a trustee shall not be entitled to
remuneration for his services.
(2) A trustee may reimburse himself out of the trust for or pay out of the
trust all expenses and liabilities reasonably incurred by him in
connection with the trust. [P.L. 1994-109, §19.]
§120. Power to appropriate.
Subject to the terms of the trust, a trustee may, without the consent of any
beneficiary, appropriate trust property in or towards satisfaction of the
interest of a beneficiary in such manner and in accordance with such
valuation in his sole discretion. [P.L 1994-109, §20.]
§121. Corporate trustee acting by resolution.
A corporate trustee may:
(a) act in connection with a trust by a resolution of such corporate
trustee or of its board of directors or other governing body, or
(b) by such a resolution appoint one or more of its officers or
employees to act on its behalf in connection with the trust.[P.L. 1994-109, §21.]
§122. Trustee may refuse to make disclosure.
Subject to the terms of the trust and subject to any order of the Court, a
trustee shall not be required to disclose to any person, government or
agency thereof, any document which:
Page 18 r
(a) discloses his deliberations as to the manner in which he has
exercised a power or discretion or performed a duty conferred
or imposed upon him; or
(b) discloses the reason for any particular exercise of such power
or discretion or performance of duty or the material upon
which such reason shall or might have been based; or
(c) relates to the exercise or proposed exercise of such power or
discretion or the performance or proposed performance of
such duty; or
(d) relates to or forms part of the accounts of the trust, unless, in a
case to which sub-paragraph (d) applies, that person is a
beneficiary under the trust not being a charity, or a charity
which is referred to by name in the terms of the trust as a
beneficiary under the trust. [P.L. 1994-109, §22.]
§123. Liability for breach of trust.
(1) Subject to this Chapter and to the terms of the trust, a trustee shall be
liable for a breach of trust committed by him or in which he has
concurred.
(2) A trustee who is liable for a breach of trust shall be liable for:
(a) the loss or depreciation in value of the trust property resulting
from such breach; and
(b) the profit, if any, which would have accrued to the trust
property if there had been no such breach.
(3) Where there are two or more breaches of trust, a trustee shall not set
off a gain from one breach of trust against a loss resulting from
another breach of trust.
(4) A trustee shall not be liable for a breach of trust committed prior to
his appointment, if such breach of trust was committed by some
other person.
(5) A trustee shall not be liable for a breach of trust committed by a co-
trustee unless:
l Page 19
(a) he becomes aware or ought to have become aware of the
commission of such breach or of the intention of his co-trustee
to commit a breach of trust; and
(b) he actively conceals such breach or such intention or fails
within a reasonable time to take proper steps to protect or
restore the trust property or prevent such breach.
(6) A beneficiary may:
(a) relieve a trustee of liability to him for a breach of trust; or
(b) indemnify a trustee against liability for a breach of trust.
(7) Paragraph (6) shall not apply unless the beneficiary:
(a) has legal capacity;
(b) has full knowledge of all material facts; and
(c) is not improperly induced by the trustee to take action under
paragraph (6).
(8) Where two or more trustees are liable in respect of a breach of trust,
they shall be liable jointly or severally.
(9) A trustee who becomes aware of a breach of trust to which paragraph
(4) relates shall take all reasonable steps to have such breach
remedied.
(10) Nothing in the terms of a trust shall relieve, release or exonerate a
trustee from liability for breach of trust arising from his own fraud,
willful misconduct or gross negligence.
(11) In the management of a trust the trustees shall discharge their duties
and:
(a) act:
(i) with due diligence;
(ii) as would a prudent person;
(iii) to the best of his ability and skills; and
(b) observe the utmost good faith. [P.L. 1994-109, §22.]
Page 20 r
§124. Trustee acting in respect of more than one trust.
(1) A trustee acting for the purposes of more than one trust shall not, in
the absence of fraud, be affected by notice of any instrument, matter,
fact or thing in relation to any particular trust if he has obtained
notice of it by reason of his acting or having acted for the purposes of
another trust.
(2) A trustee of a trust shall disclose to his co-trustee any interest which
he has as trustee of another trust, if any transaction in relation to the
first mentioned trust is to be entered into with the trustee of such
other trust. [P.L. 1994-109,§24.]
§125. Dealings by trustee with other Parties.
(1) Subject to paragraph (2), where in any transaction or matter affecting
a trust a trustee informs another party to the transaction or matter
that he is acting as trustee, a claim by such other party in relation to
that transaction or matter shall extend only to the trust property.
(2) Nothing in paragraph (1) shall affect the liability of a trustee for
breach of trust.
(3) Where in any such transaction or matter as is referred to in paragraph
(1), a trustee fails to inform such other party that he is acting as
trustee and that party is otherwise unaware of it, the trustee shall:
(a) be personally liable to such other party in respect thereof; and
(b) have a right of recourse to the trust property by way of
indemnity against such personal liability. [P.L. 1994-109, §25.]
§126. Constructive trustee.
(1) Subject to paragraph (2), where a person (in this Section referred to as
a constructive trustee) makes or receives any profit, gain or
advantage from a breach of trust he shall be deemed to be a trustee of
that profit, gain, or advantage.
(2) Paragraph (1) shall not apply to a bona fide purchaser of property for
value and without notice of a breach of trust.
l Page 21
(3) A person who is or becomes a constructive trustee shall deliver up
the property of which he is a constructive trustee to the person
properly entitled to it.
(4) This Section shall not be construed as excluding any other
circumstances under which a person may be or become a constructive
trustee. [P.L. 1994-109, §24.]
§127. Position of outgoing trustee.
(1) Subject to paragraph (2), when a trustee resigns, retires or is removed,
he shall duly surrender trust property in his possession or under his
control.
(2) A trustee who resigns, retires or is removed may require reasonable
security for liabilities whether existing future contingent or otherwise
before surrendering trust property.
(3) A trustee who resigns, retires or is removed and has complied with
paragraph (1) shall be released from liability to any beneficiary,
trustee or person interested under the trust for any act or omission in
relation to the trust property or his duty as a trustee except liability:
(a) arising from any breach of trust to which such trustee (or in
the case of a corporate trustee any of its officers or employees)
was a party or to which he was privy;
(b) in respect of actions to recover from such trustee (or in the case
of a corporate trustee any of its officers or employees) trust
property or the proceeds of trust property in the possession of
such trustee, officers or employees.
(4) Any provision in the terms of a trust purporting to indemnify a
trustee to an extent greater than is provided by this Section shall be
invalid. [P.L. 1994-109, §27.]
§128. Class interest.
(1) In this Section “class interest” means a trust or an interest under a
trust which is in favor of a class of persons.
(2) Subject to the terms of a trust, the following rules shall apply where a
trust or an interest under a trust is in favor of a class of persons:
Page 22 r
(a) Rule 1. A class closes when it is no longer possible for any
other person to become a member of the class.
(b) Rule 2. A woman who is over the age of fifty-five years shall
be deemed to be no longer capable of bearing a child.
(c) Rule 3. Where any class interest relates to income and for any
period there is no member of the class in existence the income
shall be accumulated and, subject to Section 108, shall be
retained until there is a member of the class in existence or the
class closes. [P.L. 1994-109, §28.][Rules 1, 2 and 3 above numbered to conform toformat of the Code (Rev.2003)]
§129. Power to provide for variation of terms of trust.
(1) The terms of a trust may be varied in any manner provided by
its terms.
(2) This Section is in addition to Section 154. [P.L. 1994-109, §29.]
§130. Power of accumulation and advancement.
(1) Subject to Section 108, the terms of a trust may direct or authorize the
accumulation for any period of all or part of the income of the trust.
(2) Subject to paragraph (3), income of the trust which is not
accumulated under paragraph (1) shall be distributed.
(3) Subject to the terms of the trust and subject to any prior interests or
charges affecting the trust property, where a beneficiary is a minor
and whether or not his interest:
(a) is a vested interest; or
(b) is an interest which will become vested;
(i) on attaining the age of majority; or
(ii) at any later age; or
(iii) upon the happening of any event, the trustee may:
(A) accumulate the income attributable to the interest
of such beneficiary pending the attainment of the
age of majority or such later age or the
happening of such event;
l Page 23
(B) apply such income or part of it to or for the
maintenance, education or other benefit of such
beneficiary;
(C) advance or appropriate to or for the benefit of
any such beneficiary such interest or part of such
interest.
(4) The receipt of a parent or the lawful guardian of a beneficiary who is
a minor shall be a sufficient discharge to the trustee for a payment
made under paragraph (3).
(5) Subject to the terms of the trust and subject to any prior interests or
charges affecting the trust property, the trustee may advance or apply
for the benefit of a beneficiary part of the trust property prior to the
date of the happening of the event upon the happening of which the
beneficiary becomes entitled absolutely thereto.
(6) Any part of the trust property advanced or applied under paragraph
(5) shall be brought into account in determining from time to time the
share of the beneficiary in the trust property.
(7) No part of the trust property advanced or applied under paragraph
(5) shall exceed the presumptive, contingent or vested share of the
beneficiary in the trust property. [P.L. 1994-109, §30.]
§131. Power of appointment.
The terms of a trust may confer on the trustee or any other person power to
appoint or assign all or any part of the trust property or any interest in the
trust property to, or to trustees for the benefit of, any person, whether or not
such person was a beneficiary of the trust immediately prior to such
appointment or assignment. [P.L. 1994-109, §31.]
§132. Power of revocation.
(1) A trust and any exercise of a power under a trust may be expressed
to be:
(a) revocable whether wholly or partly; or
(b) capable of variation.
Page 24 r
(2) No such revocation or variation shall prejudice anything lawfully
done by a trustee in relation to a trust before he receives notice of
such revocation or variation.
(3) Subject to the terms of the trust, if the trust is revoked the trustee
shall hold the trust property in trust for the settlor absolutely.
(4) Where a trust is partly revoked paragraph (3) shall apply to the
property which is the subject of such revocation.
(5) In paragraph (3) “Settlor” means the particular person who provided
the property which is the subject of revocation. [P.L. 1994-109, §323.]
§133. Power to lease.
Except as otherwise provided by the terms of the trust, the trustee can
properly lease trust property for such periods and with such provisions as
are reasonable. [P.L. 1994-109, §33.]
§134. Power to mortgage or pledge or borrow money.
(1) A trustee cannot properly mortgage or pledge trust property, unless a
power to mortgage or pledge is conferred by the terms of the trust.
(2) A trustee cannot properly borrow money on credit of the trust estate
and charge the trust estate therefor, unless a power to do so is
conferred by the terms of the trust. [P.L. 1994-109, §34.]
§135. Failure or lapse of interest.
(1) Subject to the terms of a trust and subject to any order of the
Court, where:
(a) an interest lapses; or
(b) a trust terminates; or
(c) there is no beneficiary and no person who can become a
beneficiary in accordance with the terms of the trust; or
(d) property is vested in a person which is not for his sole benefit
and the trusts upon which he is to hold the property are not
declared or communicated to him, the interest or property
affected by such lapse, termination, lack of beneficiary or lack
of declaration or communication of trusts shall be held by the
l Page 25
trustee or the person referred to in sub-paragraph (d), as the
case may be, in trust for the settlor absolutely or if he is dead
for his personal representative.
(2) Where an interest or property is held by the trustee for a charitable
purpose which has ceased to exist or is no longer applicable, that
interest or property shall be held for such other charitable purpose as
the Court may declare to be consistent with the original intention of
the settlor.
(3) In subsections (1) and (2) “settlor” means the particular person who
provided the interest or property affected as mentioned in
paragraph (1).
(4) An application to the Court under this Section may be made by the
Attorney-General. [P.L 1994-109, §35.]
§136. Termination of a trust.
(1) On the termination of a trust the trust property shall be distributed
within a reasonable time in accordance with the terms of the trust to
the persons entitled thereto.
(2) Notwithstanding paragraph (1), the trustee may require reasonable
security for liabilities whether existing future contingent or otherwise
before distributing trust property.
(3) Without prejudice to the powers of the Court under paragraph (4)
and notwithstanding the terms of the trust, where all the beneficiaries
are in existence and have been ascertained and none are interdicts or
minors they may require the trustee to terminate the trust and
distribute the trust property among them.
(4) The Court may:
(a) require the trustee to distribute the trust property; or
(b) direct the trustee not to distribute the trust property; or
(c) make such other order as the Court thinks fit.
(5) In this Section “liabilities” includes contingent liabilities.
Page 26 r
(6) An application to the Court under this Section may be made by the
Attorney-General, a trustee, a beneficiary or, with the leave of the
Court, by any other person. [P.L. 1994-109, §36.]
PART III - APPLICATION OF MARSHALL ISLANDS LAW TO A
TRUST.
§137. Recognition of a trust by the law of The Republic of the Marshall
Islands.
Subject to this act, a trust shall be recognized by the law of the Marshall
Islands as valid and enforceable. [P.L. 1994-109, §37.]
§138. Governing Law.
(1) The governing law of a trust shall be the law of the jurisdiction:
(a) expressed by the terms of the trust as the proper law; or
failing that
(b) intended by the settlor as the proper law; or failing either
(c) with which the trust at the time it was created had the closest
connection.
(2) A term of a trust expressly selecting the laws of the Marshall Islands
to govern the trust is valid, effective and conclusive regardless of any
other circumstances.
(3) A term of a trust specifying that the laws of the Marshall Islands are
to govern a particular aspect of the trust or that the Marshall Islands
or the courts of the Marshall Islands are the forum for the
administration of the trusts or any like provision is conclusive
evidence, subject to any contrary term of the trust, that the parties
intended the laws of the Marshall Islands to be the governing law of
the trust and is valid and effective accordingly. [P.L. 1994-109, §38.]
§139. Matters determined by governing law.
(1) All questions arising in regard to a trust which is for the time being
governed by the law of the Marshall Islands or in regard to any
l Page 27
disposition of property upon the trusts thereof including, without
prejudice to the generality of the foregoing, questions as to:
(a) subject to subsection 2(c), the capacity of any settlor;
(b) any aspect of the validity of the trust or disposition or the
interpretation or effect thereof;
(c) the administration of the trust, whether the administration be
conducted in the Marshall Islands or elsewhere, including
questions as to powers, obligations, liabilities and rights of
trustees and their appointment and removal; or
(d) the existence and extent of powers, conferred or retained,
including powers of variation or revocation of the trust and
powers of appointment, and the validity of any exercise
thereof, are to be determined according to the laws of the
Marshall Islands, without reference to the laws of any other
jurisdictions with which a trust or disposition may be
connected.
(2) Subject to the provisions of this Chapter subsection (1) shall:
(a) not validate any disposition of property which is:
(i) neither owned by the settlor nor the subject of a power
in that behalf vested in the settlor;
(ii) nor does that subsection affect the recognition of foreign
laws in determining whether the settlor is the owner of
such property or the holder of such power;
(b) take effect subject to any express contrary term of the trust or
disposition;
(c) as regards the capacity of a corporation, not affect the
recognition of the laws of its place of incorporation;
(d) not affect the recognition of foreign laws prescribing generally
(without reference to the existence or terms of the trust) the
formalities for the disposition of property;
(e) not validate any trust of real property or disposition of real
property which is void ab initio according to the laws of such
jurisdiction;
Page 28 r
(f) not validate any testamentary trust or testamentary
disposition which is invalid according to the laws of the
testator’s domicile.
(3) A disposition of property located at a place beyond the Marshall
Islands to a Marshall Islands trust or a trust that shall subsequently
become a Marshall Islands trust shall if made in accordance with the
law of that place governing such disposition be deemed to be a valid
disposition notwithstanding any law of the Marshall Islands to the
contrary. [P.L. 1994-109, §39.]
§140. Exclusion of foreign law.
Without limiting the generality of Section 139, it is expressly declared that
no trust governed by the laws of the Marshall Islands and no disposition of
property to be held upon the trust thereof is void, voidable, liable to be set
aside or defective in any fashion, nor is the capacity of any senior to be
questioned by reason that:
(a) the laws of any foreign jurisdiction prohibit or do not
recognize the concept of a trust either in part or in whole; or
(b) the trust or disposition avoids or defeats rights, claims or
interests conferred by the law of a foreign jurisdiction upon
any person or, contravenes any rules of foreign law or any
foreign judicial or administrative order or action intended to
recognize, protect, enforce or give effect to any such rights,
claims or interests; or
(c) the laws of the Marshall Islands or the provisions of this
Chapter or the principal Chapter are inconsistent with any
foreign law. [P.L. 1994-109, §40.]
§141. Change of Governing Law.
(1) The governing law of a trust may be changed to or from the laws of
the Marshall Islands provided that:
(a) in the case of a change to the law of the Marshall Islands, such
change is recognized by the governing law of the trust
previously in effect;
(b) in the case of a change from the law of the Marshall Islands:
l Page 29
(i) the new governing law would recognize the validity of
the trust and the respective interests of the beneficiaries;
(ii) the registrar is notified of the change in governing law;
(iii) all fees due for the registration of the trust in the
Marshall Islands have been paid.
(2) A change in governing law shall not affect the legality or validity of,
or render any person liable for, anything done before the change. [P.L1994-109, §41.]
§142. Spendthrift or protective trust.
(1) The terms of a trust may make the interest of a beneficiary liable to
termination.
(2) Without prejudice to the generality of paragraph (1), the terms of a
trust may make the interest of a beneficiary in the income or capital
of the trust property subject to:
(a) a restriction on alienation or disposal; or
(b) diminution or termination in the event of the beneficiary
becoming bankrupt or any of his property becoming liable to
sequestration for the benefit of his creditors;
(3) Should all or part of a protective or spendthrift trust become subject
to termination, diminution or restriction, then the said income shall
be held upon trust for the application thereof for the maintenance or
support, or otherwise for the benefit, of all or any one of the
following persons:
(a) the beneficiary in question and his or her wife or husband, if
any, and his or her children or more remote issue, if any; or
(b) if there is no wife or husband or issue of the beneficiary in
existence, the beneficiary and the person who would, if he
were actually dead, be entitled to the trust property or the
income thereof or to the annuity fund, if any, as the trustees in
their absolute discretion, without being liable to account for
the exercise of such discretion, think fit.
(4) A trust under which the interest of a beneficiary is subject to
restriction, diminution or termination under paragraph (2) is a
spendthrift or protective trust.
Page 30 r
(5) A provision in the terms of a trust requiring the interest of a
beneficiary in trust property to be held upon a spendthrift or
protective trust shall be construed as a requirement that the interest
of the beneficiary be subjected to restriction, diminution or
termination as mentioned in paragraph (2).
(6) Nothing in this section operates to validate any trusts which would, if
contained in the instrument creating the trust, be liable to be set
aside. [P.L. 1994-109, §42.]
§143. Heirship rights.
No trust or any aspect of such trust governed by the laws of the Marshall
Islands and no disposition of property to be held upon the trusts thereof is
void, voidable, liable to be set aside or defective in any fashion, nor is the
capacity of any settlor to be questioned by reason that such trust or
disposition may avoid or defeat the right, claim or interest of a person held
by reason of a personal relationship to the settlor or by way of heirship
rights. [P.L. 1994-109, §43.]
§144. Retention of control and benefits by settlor.
A trust and a registered instrument shall not be declared invalid or a
disposition declared void or be affected in any way by reason of the fact that
the settlor, and if more than one, any of them, either :
(a) retains, possesses or acquires a power to revoke the trust or
instrument;
(b) retains, possesses or acquires a power of disposition over
property of the trust or the subject of the instrument;
(c) retains, possesses or acquires a power to amend the trust or
instrument;
(d) retains, possesses or acquires any benefit interest or property
from the trust or any disposition or pursuant to the
instrument;
(e) retains, possesses or acquires the power to remove or appoint
a trustee or protector;
(f) retains, possesses or acquires the power to direct a trustee or
protector on any matter; or
l Page 31
(g) is a beneficiary of the trust or instrument either solely or
together with others. [P.L. 1994-109, §44.]
§145. Fraudulent conveyance.
(1) Where it is proven by a creditor that a trust settled or established or
property disposed to a trust:
(a) was so settled, established or disposed by or on behalf of the
settlor with principal intent to defraud that creditor of the
settlor; and
(b) did at the time of such settlement, establishment or disposition
took place render the settlor, insolvent, or without property by
which that creditor’s claim (if successful) could have been
satisfied, then such settlement, establishment or disposition
shall not be void or voidable and the trust shall be liable to
satisfy the creditor’s claim out of the property which, but for
the settlement, establishment or disposition, would have been
available to satisfy the creditor’s claim and such liability shall
only be to the extent of the interest that the settlor had in the
property prior to settlement, establishment or disposition and
any accumulation to that property (if any) subsequent thereto.
(2) In determining whether a trust, settled or established or a disposition,
has rendered the settlor insolvent or without property by which a
creditor’s claim (if successful) may be satisfied, regard shall be had to
the fair market value of the settlor’s property, (not being property of
or relating to the trust) at the time immediately after the settlement,
establishment or the disposition referred to in subsection (1)(b) and in
the event that the fair market value of such property exceeded the
value of the creditor’s claim, at that time, after the settlement,
establishment or disposition then the trust so settled or established or
the disposition shall, for the purposes of this Chapter, be deemed not
to have been so settled, established or the property disposed of with
the intent to defraud the creditor.
(3) A trust settled or established and a disposition to such trust shall not
be fraudulent as against a creditor of a settlor:
Page 32 r
(a) if settled, established or the disposition takes place after the
expiration of 2 years from the date that the creditor’s cause of
action accrued; or
(b) where settled, established or the disposition takes place before
the expiration of 2 years from the date that the creditor’s cause
of action accrued, that creditor fails to commence such action
before the expiration of 1 year from the date such settlement,
establishment or disposition took place.
(4) A trust settled or established and a disposition of property to such
trust shall not be fraudulent as against a creditor of a settlor if the
settlement, establishment or disposition of property took place before
that creditor’s cause of action against the settlor accrued or
had arisen.
(5) A settlor shall not have imputed to him an intent to defraud a
creditor, solely by reason that the settlor:
(a) has settled or established a trust or has disposed of property to
such trust within two years from the date of that creditor’s
cause of action accruing;
(b) has retained, possesses or acquires any of the powers or
benefits referred to in paragraph (a) to (g) of Section 144.
(6) Where a trust is liable to satisfy a creditor’s claim in the manner
provided for in subsection (1) but is unable to do so by reason of the
fact that the property has been disposed of, other than to a bona fide
purchaser for value without notice, then any such disposition shall
be void.
(7) For the purpose of this section the burden of proof of the settlor’s
intent to defraud the creditor lies with the creditor.
(8) For the purposes of this section:
(a) the date of the cause of action accruing shall be, the date of
that act or omission which shall be relied upon to either partly
or wholly establish the cause of action, and if there is more
than one act or the omission shall be a continuing one, the date
of the first act or the date that the omission shall have first
occurred, as the case may be, shall be the date that the cause of
action shall have accrued;
l Page 33
(b) in the case of an action upon a judgment, the date of the cause
of action accruing shall be, the date of that act or omission or
where there is more than one act or the omission shall be a
continuing one, the date of the first act or the date that the
omission shall have first occurred, as the case may be, which
gave rise to the judgment itself.
(9) The provisions of this section shall apply to all proceedings by every
creditor alleging fraud against a settlor of a Marshall Islands trust, or
against any person who shall settle property upon, or dispose of
property to, or establish a Marshall Islands trust on behalf of that
senior, to the exclusion of any other remedy, principle or rule of law
whether provided by statute or founded in equity or common law.
(10) In this section, the term “creditor” includes any person who alleges a
cause of action. [P.L. 1994-109, §45.]
§146. Commencement of proceedings.
(1) No action or proceedings whether pursuant to this Chapter or at
common law or in equity to:
(a) set aside the settlement of a Marshall Islands trust; or
(b) set aside any disposition to any Marshall Islands trust, shall be
commenced, unless such action or proceedings is commenced;
(a) in the High Court of the Marshall Islands; and
(b) before the expiration of 2 years from the date of:
(i) the settlement of the Marshall Islands trust that is
sought to be set aside; or
(ii) the disposition to the Marshall Islands trust that is
sought to be set aside, as the case may be.
(2) No action or proceedings whether pursuant to this Chapter or at
common law or in equity shall be commenced by any person:
(a) claiming to have had an interest in property before that
property was settled upon or disposed to a Marshall Islands
trust; and
(b) seeking to derive a legal or equitable interest in that property,
unless such action or proceedings is commenced:
Page 34 r
(c) in the High Court of the Marshall Islands; and
(d) before the expiration of 2 years from the date that the property
referred to in paragraphs (a) and (b) was settled upon or
disposed to a Marshall Islands trust.
(3) No action or proceeding to which subsections (1) or (2) of this Section
or Section 145 shall apply, whether substantive or interlocutory in
nature, shall be determined and no other shall be made, or granted by
the High Court (including any injunction that shall have the effect of
preventing the exercise of, or restoring to a person any rights, duties,
obligations or powers or preserving, granting custody of, detaining
or inspecting any property) unless, the applicant shall first satisfy the
High Court by affidavit, filed therein, that:
(a) the action or proceedings has been commenced in accordance
with subsections (1) and (2) of this section; and
(b) where the action or proceeding shall allege fraud or be
founded upon some other action or proceedings alleging
fraud, the determination or order sought would not be
contrary to the provisions of Section 145.
(4) Every affidavit required to be filed pursuant to subsection (3) shall be
made by the person on whose behalf the action or proceedings is
brought or, in the case of a body corporate. an officer thereof, and
every such person or officer, as the case may be, shall depose as to:
(a) the circumstances of the cause of action in respect of which the
action or proceedings are brought;
(b) the date upon which the cause shall have accrued;
(c) the date upon which the property, in respect of which the
action or proceedings is brought, was settled on or disposed to
the Marshall Islands trust;
(d) whether an action or proceedings have been commenced in
respect of the cause of action or those proceedings were
commenced.
(5) The provisions of this section shall apply to every Marshall Islands
trust expressed to be governed by the law of the Marshall Islands
and, in the event that a trust shall be registered as a Marshall Islands
trust, and shall change the law by which it is governed to that of the
l Page 35
Marshall Islands, then every proceeding after the date of registration
by a person claiming to be interested in, or to be prejudiced by, the
settlement of property upon such trust, or any disposition of property
to such trust before registration, shall be commenced subject to
subsections (1) Sand (2) and every determination and order shall be
made subject to subsection (3) as if upon the date that such settlement
or disposition was made the trust was a Marshall Islands trust
governed by the law of the Marshall Islands. [P.L. 1994-109, §46.]
§147. Bankruptcy of the settlor.
Notwithstanding any provision of the law of the senior’s domicile or place
of ordinary residence or the settlor’s current place of incorporation and
notwithstanding further that a trust is voluntary and without valuable
consideration being given for the same, or is made on or for the benefit of
the settlor spouse or children of the settlor or any of them, a trust and a
disposition to a trust shall not be void or voidable in the event of the senior’s
bankruptcy insolvency or liquidation (other than in the case of a settlor
corporation that is in liquidation) or in any action or proceedings at the suit
of creditors of the settlor but shall remain valid and subsisting and take
effect according to its tenor, subject to the provisions of Section 145.[P.L. 1994-109, §47.]
PART IV POWERS OF THE COURT
§148. Jurisdiction of court.
The Court has jurisdiction where:
(a) the trust is a Marshall Islands trust; or
(b) a trustee of a foreign trust is resident in the Marshall
Islands; or
(c) any trust property of a foreign trust is situated in the Marshall
Islands; or
(d) administration of any trust property of a foreign trust is
carried on in the Marshall Islands. [P.L. 1994-109, §48.]
Page 36 r
§149. Appointment by the Court of trustee.
(1) The Court may, whenever it is expedient to appoint a new trustee or
new trustees, and it is found inexpedient, difficult or impracticable so
to do without the assistance of the Court, make an order appointing a
new trustee or new trustees either in substitution for or in addition to
any existing trustee or trustees, or although there is no existing
trustee.
(2) In particular and without prejudice to the generality of the foregoing
provision, the Court may make an order appointing a new trustee in
substitution for a trustee who is convicted of felony, or is a person of
unsound mind, or is bankrupt, or is a corporation which is in
liquidation or has been dissolved.
(3) An order under this section, and any consequential vesting order or
conveyance, shall not operate further or otherwise as a discharge to
any former or continuing trustee than an appointment of new
trustees under any power for that purpose contained in any
instrument would have operated.
(4) Nothing in this section gives power to appoint an executor or
administrator. [P.L. 1994-109, §49.]
§150. Power to authorize remuneration.
Where the Court appoints a trustee either solely or jointly with another
person. the Court may authorize the corporation to charge such
remuneration for its services as trustee as the Court may in its sole
discretion determine. [P.L. 1994-109, §50.]
§151. Powers of new trustee appointed by the Court.
Every trustee appointed by the Court shall, have the same powers,
authorities, and discretions, and may in all respects act as if he had been
originally appointed a trustee by the instrument, if any, creating the trust.[P.L. 1994-109, §51.]
§152. Power to relieve trustee from personal liability.
(1) The Court may relieve a trustee either wholly or partly from personal
liability for a breach of trust where, it appears to the Court that:
l Page 37
(a) he is or may be personally liable for the breach of trust;
(b) he has acted honestly and reasonably;
(c) he ought fairly to be excused:
(i) for the breach of trust; or
(ii) for omitting to obtain the directions of the Court in the
matter in which such breach arose.
(2) Paragraph (1) shall apply whether the transaction alleged to be a
breach of trust occurred before or after the commencement of this
Chapter. [P.L. 1994-109, §52.]
§153. Power to make beneficiary indemnify for breach of trust.
(1) Where a trustee commits a breach of trust at the instigation or at the
request or with the consent of a beneficiary, the Court may by order
impound all or part of the interest of the beneficiary by way of
indemnity to the trustee or any person claiming through him
(2) Paragraph (1) applies whether or not such beneficiary is a minor or
an interdict. [P.L. 1994-109, §53.]
§154. Variation of terms of a trust by the Court and approval of particular
transactions.
(1) Subject to paragraph (2), the Court may if it thinks fit, by order
approve on behalf of:
(a) a minor or interdict having, directly or indirectly, an interest,
whether vested or contingent, under the trust; or
(b) any person, whether ascertained or not, who may become
entitled, directly or indirectly, to an interest under the trust as
being at a future date or on the happening of a future event a
person of any specified description or a member of any
specified class of persons; or
(c) any person unborn; or
(d) any person in respect of any discretionary interest of his under
protective trusts where the interest of the principal beneficiary
has not failed or determined, any arrangement, by
whomsoever proposed and whether or not there is any other
Page 38 r
person beneficially interested who is capable of assenting
thereto, varying or revoking all or any of the terms of the trust
or enlarging the powers of the trustee of managing or
administering any of the trust property.
(2) In the foregoing subsection “protective trusts” and “principal
beneficiary” have the same meaning as specified in Section 142.
(3) The Court shall not approve an arrangement on behalf of any person
coming within sub-paragraph (a), (b) or (c) of paragraph (1) unless
the carrying out thereof appears to be for the benefit of that person.
(4) Where in the management or administration of a trust, any sale,
lease, pledge, charge, surrender, release or other disposition, or any
purchase, investment, acquisition, expenditure or other transaction is
in the opinion of the Court expedient but the same cannot be effected
by reason of the absence of any power for that purpose vested in the
trustee by the terms of the trust or by law the Court may confer upon
the trustee either generally or in any particular circumstances a
power for that purpose on such terms and subject to such provisions
and conditions, if any, as the Court thinks fit and may direct in what
manner and from what property any money authorized to be
expended and the costs of any transactions are to be paid or borne.
(5) An application to the Court under this Section may be made by any
person referred to in paragraph (3) of Section 155.
(6) Nothing in the foregoing provisions of this section shall apply to
trusts affecting property settled by any law of the Marshall Islands.[P.L. 1994-109, §54.]
§155. Application to and certain powers of the Court.
(1) A trustee may apply to the Court for direction concerning the manner
in which he may or should act in connection with any matter
concerning the trust and the Court may make such order, if any, as it
thinks fit.
(2) The Court may, if it thinks fit:
(a) make an order concerning:
(i) the execution or the administration of any trust; or
l Page 39
(ii) the trustee of any trust, including an order relating to
the exercise of any power, discretion or duty of the
trustee, the appointment or removal of a trustee, the
remuneration of a trustee, the submission of accounts,
the conduct of the trustee and payments, whether
payments into Court or otherwise; and
(iii) a beneficiary or any person having a connection with
the trust;
(b) make a declaration as to the validity or the enforceability
of a trust;
(c) rescind or vary any order or declaration made under this
Chapter, or make any new or further order or declaration.
(3) An application to the Court for an order or declaration under
paragraph (2) may be made by the Attorney-General or by the trustee
or a beneficiary or, with the leave of the Court, by any other person.[P.L. 1994-109, §55.]
§156. Payment of costs.
The Court may order the costs and expenses of and incidental to an
application to the Court under this Chapter to be raised and paid out of the
trust property or to be borne and paid in such manner and by such persons
as it thinks fit. [P.L. 1994-109, §56.]
§157. Nature of trustee’s estate, following trust property and insolvency of
trustee.
(1) Subject to subsection (2):
(a) the interest of a trustee in the trust property is limited to that
which is necessary for the proper performance of the trust: and
(b) such property shall not be deemed to form part of his assets.
(2) Where the trustee is also a beneficiary of the same trust, paragraph
(1) shall not apply to his interest in the trust property as a beneficiary.
(3) Without prejudice to the liability of a trustee for breach of trust, trust
property which has been alienated or converted in breach of trust or
the property into which it has been converted may be followed and
recovered unless:
Page 40 r
(a) it is not identifiable; or
(b) it is in the hands of a bona fide purchaser for value without
notice of a breach of trust.
(4) Where a trustee becomes insolvent or upon seizure, execution or any
similar process of law being made, taken or used against any of his
property his creditors shall have no right or claim against the trust
property except to the extent that the trustee himself has a claim
against the trust or has a beneficial interest in the trust. [P.L. 1994-109, §57.]
§158. Protection of persons dealing with trustee.
(1) A bona fide purchaser for value without actual notice of any breach
of trust:
(a) may deal with a trustee in relation to trust property as if the
trustee was the beneficial owner of the trust property; and
(b) shall not be affected by the trusts on which such property
is held.
(2) No person paying or advancing money to a trustee shall be
concerned to see that such money is wanted, or that no more than is
wanted is raised, or otherwise as to the propriety of the transaction or
the application of the money. [P.L. 1994-109, §58.]
§159. Limitation of actions or prescription.
(1) No period of limitation or prescription shall apply to an action
brought against a trustee:
(a) in respect of any fraud to which the trustee was a party or to
which he was privy; or
(b) to recover from the trustee trust property:
(i) in his possession; or
(ii) under his control; or
(iii) previously received by him and converted to his use.
(2) Save as provided in paragraph (1), the period within which an action
founded on breach of trust may be brought against a trustee by a
beneficiary is:
l Page 41
(a) three years from the delivery of the final accounts of the trust
to the beneficiary; or
(b) three years from the date on which the beneficiary first has
knowledge of the occurrence of a breach of trust, whichever
period shall first begin to run.
(3) Where the beneficiary is a minor the period referred to in paragraph
(2) shall not begin to run before the day on which the beneficiary
ceases to be a minor. [P.L. 1994-109, §59.]
PART V REGISTRATION OF TRUSTS
§160. Application for registration.
Application for registration of a trust shall be made to the Registrar in the
prescribed form and accompanied by the prescribed fee. [P.L. 1994-109, §60.]
§161. Registration.
(1) No trust shall be registered as a trust until there has been filed with
the Registrar either, (a) a certificate from a trustee that:
(i) the trust upon registration will be a Marshall
Islands trust;
(ii) a notice of the establishment of the trust; and
(iii) a notice listing the address of the registered office of the
trust as defined in section 164: or, (b) a copy of the trust
instrument along with a notice listing the address of the
registered office of the trust.
(2) Upon receipt of a certificate and notice referred to in subsection (1) of
this section the Registrar may at the discretion of the Registrar,
register that trust upon the Register of Trusts kept for that purpose
and issue a certificate of registration in the prescribed form.
(3) A certificate of registration under the hand and seal of the Registrar
shall be conclusive evidence that all the requirements of this Chapter
in respect of registration and other matters precedent and incidental
thereto have been complied with and that the trust referred to therein
was duly registered under this Chapter.
Page 42 r
(4) Every trust registered in accordance with subsection (2) within 30
days of the trust being settled or established shall be deemed to have
been so registered at the time it was settled or established and the
provisions of this Chapter shall apply to such trust from that time as
if it were a trust.
(5) The time period specified in paragraph (4) of this Section may, upon
application and showing of cause, be extended or waived by the
Registrar. [P.L. 1994-109, §61.][subsection (2) amended by P.L. 2010-41]
§162. Annual certificate of registration.
(1) A certificate of registration issued pursuant to Section 161(2) shall be
valid and effective for one year from the date of registration specified
in that certificate.
(2) Application for renewal of registration may be made upon:
(a) filing with the Registrar an application for renewal of
registration in the prescribed form;
(b) payment of the prescribed fee.
(3) Application for renewal of registration may be made within the
period of 90 days of the date of expiry of the last certificate of
registration, no application for renewal of registration pursuant to
subsection (2) shall be granted where application is not made or the
prescribed fee paid within such period.
(4) Every renewal of registration granted shall take effect from the date
of expiry of the last certificate of registration.
(5) The time period specified by paragraph (3) of this Section may, upon
application and showing of cause, be extended or waived by the
Registrar. [P.L 1994-109, §62.]
§163. Registration of trust instrument.
Any person who is a trustee may provide the Registrar with a copy of the
trust instrument or any amendment thereto which shall be certified in the
manner prescribed and the Registrar shall register that copy as a true copy
and file the same. [P.L. 1994-109, §63.]
l Page 43
§164. Registered office.
(1) The registered address of a trust in the Marshall Islands shall be the
office of the Marshall Islands trustee.
(2) The address for service of any document upon a trust shall be the
registered office of that trust. [P.L. 1994-109, §64.]
§165. Proceedings by or against a trust.
Where any proceedings are instituted by or against a trust it shall be
sufficient to name the Marshall Islands trustee and it shall not be necessary
to join in the action any other trustee. [P.L. 1994-109]
PART VI MISCELLANEOUS
§166. Reserved.[P.L 1994-109, §66, previous section “Appointment of Registrar” eliminated by P.L. 1997-53, §2.]
§167. Application of this Chapter.
(1) Unless the context otherwise requires the provisions of this Chapter
shall apply to:
(a) Marshall Islands trusts;
(b) all registered instruments whether they take effect on, before
or after the commencement of this Chapter; and
(c) any disposition to or by a Marshall Islands trust.
(2) A trust registered under this Chapter shall be a valid trust
notwithstanding that it may be invalid according to the law of the
settlor’s domicile or residence or place of current incorporation.
(3) In determining the existence and validity of a trust registered under
this Chapter the Court shall apply;
(a) the provisions of this Chapter; and
(b) any other law of the Marshall Islands; and
(c) any other law, which would be applied; if to do so, would
validate the trust. [PL. 1994-109, §67.]
Page 44 r
§168. Resident Beneficiaries.
The provisions of this Chapter shall not have any application to a
beneficiary who is a resident of the Marshall Islands. [P.L. 1994-109, §68.]
§169. Confidentiality.
(1) Except where the provisions of this Chapter require and subject to
subsection (2) of this section, it shall be an offence for a person to
divulge or communicate to any other person information relating to
the establishment, constitution, business undertaking or affairs of a
Marshall Islands trust.
(2) All judicial proceedings, other than criminal proceedings relating to a
Marshall Islands trust shall, unless ordered otherwise, be heard in
camera and no details of the proceedings shall be published by any
person without leave of the Court or person presiding. [P.L. 1994-109, §69.]
§170. Immunity from liability and suit.
(1) In the performance of their duties, under the Trust Act of 1994 (50
MIRC 1), the Trust Companies Act 1994 (50 MIRC 2), and the Trustee
Licensing Act of 1994 (50 MIRC 3), the Registrar, any Deputy
Registrar, and/or any trust corporation and/or any agent appointed,
authorized, recognized, and/or designated by the Registrar or any
Deputy Registrar, or trust corporation, or by any person acting on
their behalf for the administration of the provisions of this Title or
any Regulation promulgated pursuant thereto or for the performance
of any services, pursuant to this Chapter, together with any affiliate
of any such agent, their stockholders, members, directors, officers
and employees, wherever located, shall have full immunity from
liability and from suit with respect to any act or omission or thing
done by any of them in good faith in the exercise or performance, or
in the purported exercise or performance, of any power, authority or
duty conferred or imposed upon any of them under or in connection
with this Title or any Regulation, as amended, or any other law or
rule applicable to the performance of any of their said duties.
(2) The immunity provided by this Section shall only apply to those acts
or omissions of agents or employees of the entities described in this
l Page 45
Section, done by them in the course of and in connection with the
administration of the Republic of the Marshall Islands Trust Program.[added by P.L. 1997-37, §2.]