Breach of Trust Insurance
Trustees are under a duty to ensure that any assets held in trust for members, shareholders or other beneficiaries are distributed in accordance with the trust deed. However, often for many reasons it may be unclear as to what a trustee needs to do in order to satisfy the terms of the trust deed eg. monies may be due to a charity which has been incorrectly described in the will/trust deed, or a clause may have been drafted poorly – leaving some uncertainty about its strict interpretation, or it may not be possible to identify all of the beneficiaries who may be entitled when a trust is being wound up.
Trustees may find it difficult to satisfy the requirements of existing beneficiaries of a trust as well as protecting his or her own position.
There is the potential for claimants to be unaware of their entitlement for many years.
Trustee Indemnity Insurance will enable monies or other assets to be dispersed by the trustees to the existing beneficiaries, whilst protecting the trustees from claims that they have acted incorrectly.
- Upon payment of a one-off premium cover is provided in perpetuity
- Removes the risk to trustees of personal liability for claims arising out of the distribution of the trust funds without having provided for the claimant’s share
- Allows the trust to be wound up and the assets dispersed where the officers or members agree there is no longer a need to keep the trust going
- Ensures that the potential interests of other parties who have not consented to the winding-up arrangements are provided for
What The Policy Covers
- Any monies which an unknown beneficiary is entitled to receive from the trust, not recoverable from the trust or the beneficiaries to whom it has been distributed and for which the trustee would otherwise become personally liable
- Costs incurred with the consent of the insurer in defending any action brought by a claimant against the trustee
- Any other costs and expenses incurred with the prior consent of the insurer