Bust Trusts—Navigating The Hazards

The effect of the statutory limitation on the liability of trustees of Jersey and Guernsey law trusts to the extent of the trust fund has given rise to the possibility of a trust becoming insolvent. For many years regarded as a heresy by trust law purists, the courts of Jersey and Guernsey have started to grapple with possible consequences that fall on those dealing with a trustee of an insolvent trust and how to navigate the complex relationship between the trustee’s indemnity and its liability to third parties and beneficiaries.