Liechtenstein Trust | Trustee | Rights | Duties | Liability

The trustee is the natural or legal person to whom the settlor transfers certain assets in accordance with the trust deed so that he can manage and use them in his own name and in favour of the beneficiaries.

Expertise

• Appointment of the trustee
• Rights and duties of the trustee
• Liability of the trustee for debts of the trust property
• Liability of the trustee for breach of trust
• Death Incapacity to act Bankruptcy of the trustee

Appointment of the trustee

The trustee is appointed by the trust deed or by the district court and assumes office by written consent or declaration of acceptance.

Several natural persons or legal entities, domestic or foreign, irrespective of their place of residence, or legal entities without legal personality may exercise the office jointly as co-trustees. Insofar as the personal fulfilment of trust duties is not important, the trustee may have all administrative acts carried out by third parties.

At least one trustee must be domiciled in Liechtenstein and be authorised in accordance with the Liechtenstein Trustee Act.

If the trustee does not accept the office or ceases to be trustee, the district court may appoint a court trustee, unless the trust deed provides otherwise.

Rights and duties of the trustee

The trustee has the right and the duty to demand the trust property specified by the settlor in the trust deed from the settlor and to manage and utilise it in the interests of the beneficiaries.

The trustee must exercise the care and diligence of a prudent businessman. The standard of care and diligence goes beyond that which the trustee would apply in his own affairs. The trustee must refrain from doing anything that is contrary to the purpose of the trust and take all precautions to ensure the safekeeping and appropriate use of the trust property.

The trustee is obliged to keep a list of assets and accounts, to keep the trust assets strictly separate from his other assets and – if he is acting commercially – to keep a list of his trusteeships.

The trustee must have all records and supporting documents available at the domestic registered office. He is obliged to provide information and render accounts to an auditor, the settlor and entitled beneficiary and the district court, unless the trust deed provides otherwise.

The trustee is prohibited from engaging in self-dealing.

In return, the trustee is entitled to an appropriate fee and reimbursement of his necessary expenses and costs from the trust assets, the settlor and, subsidiarily, from the beneficiaries.

The trustee has a right of cancellation. The notice period is generally three months to the end of the year. In important cases (e.g. gross breach of duty), the district court can remove the trustee from office on the basis of a complaint by a trust participant.

Liability of the trustee for debts of the trust property

The trustee is liable for the debts of the trust property to third parties with the trust property and subordinated with all its assets.

Several trustees are jointly and severally liable. However, the trustee may take recourse against the settlor and entitled beneficiaries, unless the trust deed provides otherwise.

The disclosure of the trust relationship alone does not mean that the personal liability of the trustee and other parties involved ceases. It is up to the trustee and other trust participants to prove that the third party was aware of the limitation of liability. Only then is the trustee exempt from liability and the settlor and the beneficiaries are exempt from recourse.

Liability of the trustee for breach of trust

If the trustee breaches his fiduciary duty, he shall be liable to the settlor or, in the absence of the settlor, to the beneficiaries for compensation for the resulting loss.

Compensation is always payable to the trust property and liability is personal and unlimited. Several trustees are jointly and severally liable unless they have fulfilled their duty of supervision. The trustee is also liable for the actions of vicarious agents.

Death Incapacity to act Bankruptcy of the trustee

In the event of the death, termination or incapacity to act of the trustee, the district court shall appoint a successor unless otherwise stipulated in the trust deed.

If the trustee goes bankrupt, the trustee remains in office unless the trust deed stipulates otherwise or the court orders otherwise.

In the event of the trustee’s bankruptcy, the trust assets are third-party assets with the consequence that trust creditors have no access. When the trust assets are segregated from the trustee’s assets, the trust assets are transferred to the successor trustee.