Liechtenstein Trust | Control | Supervision | Protector | Auditor
Under Liechtenstein trust law, the settlor is completely free to organise the control and supervision of the trust and stipulate this in the trust deed.
Expertise
Supervision by the district court
Trusts that are entered in the commercial register are subject to ongoing supervision by the district court.
Exceptions: It is an express trust (family trust) or any supervision is excluded in the trust deed.
In addition, all organs and beneficiaries of the trust (including discretionary beneficiaries) can in principle appeal to the district court if the trustee fails to fulfil its obligations.
The district court can act ex officio, remove the trustee from office, appoint a new trustee or order an appeal.
Auditors
The settlor may stipulate in the trust deed that an independent auditor be appointed who is responsible for auditing the annual accounts.
The trustee is obliged to provide information and render account to the auditor and otherwise to the settlor and the beneficiaries, unless the trust deed contains a different provision.
Protector
The protector is appointed by the settlor to monitor compliance with the trustee’s obligations under the trust deed. The powers of the protector are set out in the trust deed.
Protectors generally have the task of representing the will of the settlor in important decisions, e.g. approval of decisions by the trustee on the administration of the trust, approval of balance sheets or the dismissal of executive bodies and other participants in the trust.
The settlor can provide the protector with comprehensive powers of instruction, approval and veto in the trust deed. As an optional body, the protector can assume the role of a pure enforcement body or be entrusted with the trust’s asset management. The protector’s most far-reaching authorisation is the appointment and dismissal of trustees.
Caution! Reserved powers of a settlor or trustee can be seized in enforcement proceedings, resulting in the trust’s assets falling into the hands of creditors. This can be prevented if the protector is authorised to approve the exercise of the settlor’s or trustee’s reserved powers.
Protector liability
The protector is generally liable in accordance with the general provisions of Liechtenstein law. The protectors are only exempt from liability if they have acted with knowledge of the facts, free of conflicts of interest and in good faith and in the best interests of the trust.
The Supreme Court in Liechtenstein has ruled
- that it is the protectors’ inexcusable duty to familiarise themselves with all legal details of the trust documents. The protectors’ knowledge is imputed to the trust. Ignorant trustees can have legal consequences for the trust.
- Like other supervisory bodies, the protectors should have the necessary skills, knowledge and experience, which also depend on the size and structure of the trust assets.
- The protectors must act independently and free from conflicts of interest.
- The protectors are only exempt from liability if they have acted with knowledge of the facts, free from conflicts of interest and in good faith and in the best interests of the trust.
Our advice: A protector mandate should not be accepted without a comprehensive insurance policy.
Conclusion: There is no other company form or other vehicle with which you can organise asset security as flexibly and comprehensively as with the Liechtenstein Trust.
Do you have any questions about the control, supervision or protectorate of the trust? For a non-binding enquiry, please contact us by phone or e-mail or use the contact form at the bottom of this page.
On request, we will be happy to assume the controlling mandate as protector or advisory board of your trust.
