Trust restructuring: key early considerations for trustees

A trust structure is designed to be a robust and enduring framework that serves the needs and intentions of the settlor and beneficiaries for generations to come. But even the most carefully conceived structures do not exist in a vacuum.  

Legal and regulatory frameworks evolve, family dynamics change, and shifts in tax residence or asset composition can create challenges or make the original structure unsuitable. 

This was a key topic at the Ogier and Serle Court trusts seminars in Switzerland, where Ogier’s Private Wealth experts explained how thoughtful restructuring can ensure a structure remains fit for purpose, fully compliant and continues to deliver meaningful benefit to all involved. This briefing aims to outline the key considerations from the early stages of restructuring a trust structure, particularly where they span multiple jurisdictions.  

Start with coordinated advice

Trust and private wealth restructuring should start with sound risk management by trustees and directors. Obtaining legal, tax and jurisdiction-specific advice should be a first step, especially if structures have been established over time, or involve multiple jurisdictions and different advisory teams.  

Ensure all necessary advisers are retained, and that their roles are clearly defined and communicated across the team. A well-coordinated, cohesive advisory team will be one of the most effective tools for navigating a complex restructuring with confidence.  

Review the underlying documentation carefully

Before documentation is prepared, it is important that the terms governing the existing structures are understood in detail, including legal, tax, and regulatory requirements in each relevant jurisdiction.  

Even the most well-conceived plans can encounter unforeseen constraints once documentation is underway. Early identification of matters like limitations within existing constitutional documents, or legal and tax requirements that dictate a precise sequence of steps, is key to keeping the process on track.  

The following are common provisions to consider for an effective restructuring process and to ensure the ongoing validity of the trust arrangements:  

• exculpation clauses: which can differ across jurisdictions based on trust legislation provisions
• mismatched perpetuity periods: which may need to be aligned to allow transfers
• rules about excluded persons: which may limit transfers from one structure to another
• limitations regarding the location or number of trustees and other office holders   

A restructuring plan should be designed with any specific requirements firmly in mind and ensure it is reviewed collectively by all advisors, so every angle has been addressed. 

Internal or external restructuring?  

The considerations surrounding fiduciary restructuring are multifaceted. It’s important to distinguish whether the restructuring is internal reorganisation to the existing framework, or whether it involves external transfers or distributions of assets.  

The implications of changes in entities and jurisdictions can, for example, affect the standard of liability and the nature of duties owed, including where there are:  

• changes to the roles and powers of trustees, protectors or other power holders  
• changes to asset types, which may require specialist input  
• regulatory filings relating to changes 
• change of control notification requirements in external restructuring  

Talk to beneficiaries  

Presenting proposals clearly and transparently to beneficiaries is key to the success of a restructuring, particularly where the changes are designed to ensure the structure serves future generations well. 

Encouraging, or requiring, beneficiaries to seek independent legal advice is also essential, as failure to do so could prove costly if legal or tax considerations have been overlooked from their perspective. 

This transparency is not only best practice, but it also helps to ensure that valid indemnities or releases are obtained where appropriate from beneficiaries, which offers trustees additional protection against future challenges or claims by beneficiaries.   

Trustee protection and risk management  

Restructuring can involve decisions that carry an elevated level of risk. Trustees and directors, can seek indemnities and releases from adult beneficiaries or entities involved in the structure. These must, however, be approached with care – especially when received from individuals.  

Under Guernsey and Jersey law, a beneficiary may indemnify a trustee for breach of trust. Certain requirements must be met for the indemnity to be valid and enforceable, including providing all material information to the indemnifier.  

Indemnities do not extend to unborn, minor or unascertained beneficiaries, and beneficiaries may revise their position following independent advice or further material information. The effectiveness of any indemnity can also be undermined where there are attempts to exclude liability for breach of trust.  

Where the decisions involved are momentous, or if there is a real prospect of dispute, seeking the Court’s approval – commonly known as a “blessing” – is a valuable protective measure.  

Full and frank disclosure must be made by trustees in an application, even where this creates tension with local confidentiality traditions – as may be the case, for example, for Swiss-based trustees appearing before Jersey or Guernsey courts.  

The Grand View and Dawson Damer series of cases demonstrate how careful planning and coordination across legal systems is essential where jurisdictional complexities require the identification of the appropriate court and the management of multi-jurisdictional proceedings.  

Practical takeaways

• involve the right advisers from day one, be that legal, tax or fiduciary service professionals and explain the short-, medium- and long-term goals when discussing the form of structure to be created  
• periodically review the structure, considering changes in legal, tax and regulatory requirements  
• stress-test the structure to the extent possible to ensure it is fit for purpose and suitable for the long term  
• consider who duties are owed to and what roles are played and how these may be affected if the structure needs to change  
• evaluate the risks involved in the restructure and what protections can be obtained   

A considered approach  

Ideally, trust and fiduciary structures should be designed from the outset with the flexibility to accommodate future change, rather than defaulting to unnecessarily complex arrangements. Thoughtful consideration of appropriate jurisdictions, potential changes in entities or vehicles, and the quality of professional and judicial support available across all relevant locations will lay the strongest possible foundation for a suitable structure.  

Throughout the restructuring process, the protection of trustees and directors through indemnities, full disclosure, and ongoing legal support remain key considerations, ensuring that administration continues to meet both present and future needs with confidence.  

How Ogier can help  

Ogier’s Private Wealth experts in our Trusts Advisory Group offer specialised expertise and a dedication to excellence. Our highly experienced and well renowned team excel in cross-border trust law. 

We are known for providing clear, practical and responsive advice and provide tailored solutions to meet your unique needs. Get in touch with a member of our team to learn more. 

About Ogier

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Disclaimer

This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.

Regulatory information can be found under Legal Notice