Trustees

News & Analysis as of

Trustee Discretion and Liability of an Individual

It's an understatement to say that the role of the trustee is fraught with pitfalls. Often times, a settlor creates a trust to suit his or her needs, but rarely does the settlor take into consideration, the difficulties the...more

SEC Sanctions Independent Trustees for Approving Mutual Fund Advisory Contract without Sufficient Information

Underscoring the need for independent trustees to act vigilantly, a recent SEC consent order issued in an enforcement action imposed discipline on a mutual fund's independent trustees, its investment advisor, and the...more

Trustees Beware: Which Fiduciary Standard Applies to Your “Business Judgments”?

To what legal standard must a trustee adhere when he or she also participates in the control of a family or closely held business? Courts continue to grapple with this question. The high courts in both Georgia and Nebraska...more

SEC Sanctions Independent Trustees for Deficient Advisory Contract Review

In a cease-and-desist order entered on June 17, 2015, the SEC found that a fund adviser, two independent trustees, and an inside trustee willfully violated Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”)...more

The Road Ahead for TransVantage Solutions, Inc.

The Chapter 7 Trustee appointed in the TransVantage Solutions, Inc. bankruptcy case ground the gears of the nation’s trucking industry this past April when he filed over 500 adversary complaints against common carriers,...more

Deepening Insolvency: A Viable Theory of Damages in the Eleventh Circuit

“Deepening Insolvency” is a developing theory of law in cases brought by bankruptcy trustees, litigation trust trustees, receivers, reorganized debtors, or some other plaintiff “standing in the shoes” of an insolvent company....more

A CEQA Trustee Agency “Muscles Up”: Third District Holds Department of Fish and Wildlife’s Newly Exercised Power To Require Notice...

Under CEQA, a “trustee agency” is a “state agency having jurisdiction by law over natural resources affected by a project which are held in trust for the people of the State of California” and “[t]he California Department of...more

When A Parent Files For Bankruptcy Colleges May Forfeit Tuition Payments

While it is hard to imagine that a college or university could be forced to refund tuition paid years ago that enabled Student to receive a college education, this scenario is now playing out with increasing frequency. Many...more

The Crummey trust: Keeping both the IRS and the creditors at bay is taking some fancy footwork

Since Crummey v. Commissioner was decided in 1968, the IRS has been making life difficult for the settlors of Crummey trusts. Only recently the parties again skirmished, this time over whether an in terrorem clause in the...more

Can Attorneys Get Paid for Defending Their Right to Get Paid? Supreme Court Set to Decide in Baker Botts, L.L.P. v. ASARCO, L ....

Currently before the Supreme Court is Baker Botts, L.L.P. v. ASARCO, L.L.C. ,in which the Court will determine whether bankruptcy judges have discretion to award compensation for the defense of a fee application under 11...more

The Small Business, Enterprise and Employment Act - Corporate restructuring and insolvency changes come into effect

Four important changes to the Insolvency Act 1986 (IA86) will come into force this week (26 May 2015). They do so without transitional provisions and so will apply automatically to existing corporate insolvency proceedings...more

Bailment: Retaining Funds Received From a Bankrupt Bailee Is Not a Slam Dunk

In re Mississippi Valley Livestock, Inc., 745 F.3d 299 (7th Cir. 2014) – A debtor sold cattle for the account of a cattle producer and then remitted the proceeds to the producer. A chapter 7 trustee sought to recover...more

The Evolving Duty of Trustee Communication with Beneficiaries

Trustee communications with beneficiaries have followed an interesting legal path in Kentucky. The original Kentucky statute regarding communication with the beneficiaries required that the trustee must keep the beneficiaries...more

For the record: A review of the British Virgin Islands Trustee (Amendment) Act, 2015

On 30 March 2015 a new section (the New Section) relating to trustees’ obligations to maintain trust records was inserted into the British Virgin Islands’ (BVI) Trustee Ordinance. The provisions of the New Section are not...more

Foreclosures: Beware Unexpected Violations

Field v. Bank of America, N.A. (In re Gibbs), 522 B.R. 282 (Bankr. D. Hawaii 2014) – A bankruptcy trustee sued a mortgage lender to recover for defects in a prepetition non-judicial foreclosure sale. The lender brought a...more

Supreme Court considers place of “establishment” in Olympic Airlines appeal

Trustees of Olympic Airlines SA Pension and Life Assurance Scheme v Olympic Airlines SA [2015] UKSC 27 - The Supreme Court was unanimous in its brief judgment, that for the purpose of establishing secondary proceedings,...more

"Last Man Standing" Pension Schemes - Pension Protection Fund Levies Trustees of defined benefit pension schemes which claim to...

The PPF provides compensation to members of defined benefit pension schemes where the sponsoring employer of the scheme becomes insolvent and the scheme cannot provide 100 per cent PPF compensation. Part of the PPF's funding...more

Supreme Court ruling limits PPF protection for schemes with no UK employers

In October 2009, the Greek courts ordered the winding up of the Greek national airline, Olympic Airlines. Olympic ran flights from UK airports, employing 27 employees in the UK, dealing with things such as ticket sales. In...more

Why trustees need to know something about will residue clauses

The Anglo-American trust is an invention of the judiciary, specifically the English Court of Chancery. The will, a testamentary instrument, on the other hand, is a creature of statute. The testamentary trust is a product of...more

Financial Services Weekly News Roundup - April 2015 #5

Ninth Circuit Denies Rehearing of Northstar v. Schwab. On April 28, the U.S. Court of Appeals for the Ninth Circuit denied the petition of Schwab Investments’ (Schwab) for rehearing and rehearing en banc in the case of...more

A Trust May Be Subject to California Income Taxation if the Trustee Resides in California

California aggressively taxes non-grantor trusts. A non-grantor trust with a California resident trustee may be subject to California income taxation even if none of the assets of the trust are located in California, none of...more

Pensions Alert UK: April 2015 reforms: Final regulations made

The introduction of the DC flexibilities announced in last year’s Budget is now only a matter of days away, and in recent weeks various sets of regulations have been made in final form which will come into force on 6 April...more

9th Circ. Panel Bolsters Trustees’ Reach-Back Powers

In a recent decision, the United States Bankruptcy Appellate Panel of the Ninth Circuit resolved what it described as an issue of “first impression” in the Ninth Circuit — whether or not the two-year statute of limitations...more

Combating pension scams

For some time now, the issue of transfer requests and pension scams (often referred to as pension liberation) has been a difficult one for trustees of occupational pension schemes. On the one hand, members may have rights to...more

Trustees Should Avoid Bitcoin

As bitcoin becomes increasingly popular, some are starting to ask: should trustees of trusts invest a portion of trust assets in bitcoin? There are very strong reasons why they should not. As I explain below, investing in...more

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