Trustees: What Is A Lien? – Finance and Banking – Isle of Man – Mondaq News Alerts
Isle of Man: Trustees: What Is A Lien?
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What is a lien?
A right to keep possession of property belonging to another
person until a debt owed by that person is discharged.
A trustee has the right to be indemnified against proper trust
expenses out of the assets of the trust.
A trustee has a lien over the trust fund to secure their right
to be indemnified.
When it is important?
In the event of:
- An appointment to a beneficiary
- A change in trustee
- An insolvent trust
- Contingent liabilities arising
Trustees Rights
- Reimbursement of costs
- Exoneration for any liabilities
- Realisation of assets
- Retention of trust fund
Important considerations
When a trustee enters into a contract with a third party it is
personally liable on that contract unless it contains a term that
excludes personal liability.
Where a trustee decides to retain trust assets, it is advisable
that they record the exact terms and conditions on which they
retain those assets, for the benefit of all parties
A trustee is not automatically entitled to retain the whole
trust fund. If the maximum liability is known, a trustee can retain
that maximum amount; if the maximum liability is unknown, a trustee
should retain enough to cover an amount calculated on reasonable
assumptions.
Originally published 10 June, 2020
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Source: mondaq.com