Our European trustee resigned. What happens to the trust?

Establish what the existing trust allows

The first task was to review the trust deed and the reason for the resignation. A change of trustee could affect a structure that already held assets and controlled businesses. The family needed continuity while the legal and practical consequences were assessed.

AGATE mapped the settlor, beneficiaries, protector, trustee, underlying companies, investment accounts and operating businesses. With the relevant legal advisers, we examined who could appoint a successor, how the retiring trustee could leave, and what had to happen to avoid a gap in administration.

• The trust deed, governing law and appointment or removal powers.
• The residence of the settlor, beneficiaries and protector, and the trust's tax and reporting position.
• Assets, holding companies, bank accounts and investment relationships affected by the transition.
• The family's objectives for control, succession and future administration.

Understand why the trustee was leaving

The resignation could have reflected the trustee's risk appetite, banking relationships, jurisdiction exposure or policies for particular client profiles. We reviewed the underlying reason before considering a replacement. Appointing another trustee without addressing that reason could leave the family facing the same problem again.

Compare the possible routes

The review considered a new professional trustee, a lawful migration or restructuring of the existing arrangement, a Hong Kong trust where appropriate, and a private trust company for a suitable family. It also considered how Asian assets and companies would be held and administered.

Each route depended on the existing deed, governing law, asset locations, tax position and family objectives. A private trust company was one option to examine; its suitability and regulatory position required a separate assessment.

Document how the family would retain involvement

The family wanted practical involvement in decisions without undermining the legal effectiveness of the trust. The governance review covered trustee and protector powers, appointment rights, subsidiary directors, bank signatories and succession arrangements.

For a potential private trust company, that also meant considering board composition and control. Any reserved powers or consent requirements needed to be checked under the applicable law and written into the appropriate documents.

Plan banking continuity before implementation

A trustee change can trigger requests from banks for updated customer information, beneficial ownership details, signatory instructions, resolutions and source-of-wealth documents. Those requirements were part of the transition plan.

We identified the accounts and investment relationships that could be affected so the family could coordinate the handover with the trustee, banks and advisers before implementing a change.

Coordinate the tax and reporting review

Advisers in the relevant jurisdictions needed to assess the residence of the trust, settlor and beneficiaries; controlled foreign company rules; distributions; reporting, including the Common Reporting Standard; and the tax position of underlying companies and investments.

Changing the trustee or governing law also required review. AGATE's role was to coordinate the Asian part of the structure with the family's legal and tax advisers.

When this review is useful

This review is relevant when a trustee gives notice, the family needs an Asian trustee or administrator, banks request new ownership information, or the current arrangement no longer fits the family's assets and succession plans.