Member Article

The Irish Law Reform Commission has published two consultation papers recommending legislative changes to clarify the role, duties, powers and responsibilities of trustees, including charitable trustees, so that general trust law keeps up with the ever changing economic and social climate. These consultation papers will be of particular interest to liquidators who take over the role of trustee of an insolvent employer’s pension scheme as they indicate possible changes to the standard of care required of trustees with special expertise and also to the validity of exemption clauses. The Commission’s main recommendations are: that trustees should be subject to a general statutory duty of care based on a mix of objective and subjective standards. Any special knowledge or expertise a trustee may have or, if he acts as a trustee in the course of a business or profession, that it is reasonable to expect of a person acting in the course of that business or profession, should be taken into account. This duty would be applied, among other things, to the exercise of trustees’ investment powers and powers of delegation and insurance; regulation of trustee exemption clauses. Rather than distinguishing between lay and professional trustees and stipulating what should be excluded, the Commission recommended that such clauses be addressed in relation to the standard of irreducible core obligations of trusteeship in conjunction with the proposed statutory duty of care. (Current case law suggests that these “irreducible” obligations are limited to the duty to perform the trusts honestly and in good faith for the benefit of the beneficiaries); clarification of the criteria for the appointment and qualification of trustees; expansion of trustees’ powers of delegation; that trustees be entitled to insure trust property to its full replacement value in respect of loss or damage, “however caused.”