Trust Litigation In Bermuda's Financial Landscape

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Conyers

Contributor

Conyers is a leading international law firm with a broad client base including FTSE 100 and Fortune 500 companies, international finance houses and asset managers. The firm advises on Bermuda, British Virgin Islands and Cayman Islands laws, from offices in those jurisdictions and in the key financial centres of Hong Kong, London and Singapore. We also provide a wide range of corporate, trust, compliance, governance and accounting and management services.
If you've seen the hit HBO series Succession then you may have already formed a sense of the machinations and intrigue that can occur when ultra-high-net-worth families fall out with each other...
Bermuda Finance and Banking
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If you've seen the hit HBO series Succession then you may have already formed a sense of the machinations and intrigue that can occur when ultra-high-net-worth families fall out with each other – at least in the world of TV fiction. If you haven't seen Succession, here's a quick primer without spoilers.

The aging patriarch of the Roy family, Logan Roy, is the owner of a New York-based global media empire. Having steered the business for many years, Mr. Roy experiences a decline in his health. The question then becomes who out of his four children might succeed him at the helm? There follows the twists and turns of a velvet battle, as his children vie for prominence within the family business. Think Game of Thrones in the boardroom – although without all of the deaths.

The plot makes for rollicking entertainment of course, but how close to the mark is the reality?

Most Bermudians know already that our Island is recognised as a pre-eminent international financial centre. Many of us also know this includes Bermuda being the 'Rolls Royce' jurisdiction for both insurance and reinsurance. What may be less known to those on our Island, however, is this: Bermuda is also a major trust jurisdiction. One of the pre-eminent in the world in fact.

Bermuda is an attractive jurisdiction for trusts, owing to our economic, legal, and political stability, which is aided by being a British Overseas Territory. The Island is also known for trust law innovation and flexibility. The jurisdiction is fortunate to have a sophisticated legislation regime, an efficient judicial system, and several highly-regarded providers of trust services. All of this occurs in a substantive and well-regulated business and legal environment, committed to maintaining global best practice.

And Bermuda has been top-tier in the trust industry for many decades, providing trust services to wealthy families and charitable organisations (and since 1989 providing trust services for purpose trusts) with internationally mobile clients across the globe.

Given the longevity of some Bermudian trusts, with the beneficiaries now into the second, third, and even fourth generation, it is perhaps unsurprising that, despite prudent planning, some intra-family difficulties do arise. Of course, such family disputes are usually a far cry from the fictional world of Succession, but over the past few decades the Bermuda Court has seen a dramatic uptick in trust litigation.

But claimants should proceed with caution. It is not easy to upend a Bermuda trust structure. Frequently the point of a trust is asset preservation with dynastic, charitable, or philanthropic intent. It was built to last.

Bermuda also has embedded 'firewall' legislation to guard against 'forced heirship' claims that may arise in other (often civil law) countries. This does not stop some beneficiaries from giving it a try. And where the family business is enveloped within the trust structure, the attack may sometimes be as much about seeking business control as about obtaining trust assets.

Two other features are worthy of brief mention. First, for many years now Bermuda's courts have been willing to support confidentiality of trust proceedings brought before them that are non-contentious and can be presented as effectively private matters. This is a markedly different position from other courts, particularly those of England. Whilst the principle of open justice generally does prevail in Bermuda's courts, as is the case in England, there is scope in Bermuda to argue that an application relating to a trust matter is essentially a private family matter, and publication of names and amounts and other details is not in any public interest, and could expose family members, especially minors, to unwanted or even dangerous attention.

Secondly in the non-contentious sphere, Bermuda has been a leading jurisdiction in restructurings of trusts where for example their provisions may lack modern powers, or certain provisions have become outdated and no longer fit for purpose. Indeed, some of these successful restructurings could well have pre-empted, or reduced, substantial family conflict!

This increase in claims is doubtless down to any number of factors, but generational transition is certainly one of them. The storylines may not be as cutthroat as HBO's fictional Roy family, but there are certainly some colourful tales emerging from the real world, too.

This article was originally written for the Bermuda Business Review 2024-2025.

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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