The term “Interested Trustee” as described in your query is a specific designation used in the context of trust law.
It outlines various scenarios in which a trustee of a trust may be considered to have a conflict of interest or a direct or indirect stake in the trust’s affairs.
Here’s a breakdown of the definition:
- A Trustee as a Transferor or Beneficiary: A trustee is considered an “Interested Trustee” if they have either contributed property to the trust (transferor) or stand to benefit from the trust’s assets (beneficiary).
- Related or Subordinate to a Transferor or Beneficiary: If a trustee is either a relative of, or in a subordinate position to, someone who has transferred assets to the trust or who benefits from the trust, they are also considered an “Interested Trustee”. This includes situations where the trustee has a familial, professional, or possibly financial relationship that might influence their decisions in managing the trust.
- Removal and Replacement Power by a Transferor: If a trustee can be removed and replaced by the person who established the trust, and the new trustee can either be the transferor themselves or someone related or subordinate to the transferor, the trustee is deemed “Interested”.
- Removal and Replacement Power by a Beneficiary: Similarly, if a trustee can be removed and replaced by a beneficiary of the trust, and the new trustee can be either the beneficiary themselves or someone related or subordinate to the beneficiary, this also qualifies the trustee as “Interested”.
Additional definitions in the context:
- Transferor: This is defined as a person who has transferred property to the trust. This includes individuals who have declined to receive property (through disclaimer), resulting in the property being transferred to the trust.
- Beneficiary: This refers to any person who currently benefits from, or may in the future benefit from, the trust’s income or principal, according to the terms set out in the trust. This includes individuals with remote or contingent interests in the trust, but excludes those whose only connection to the trust is as a potential nominee under a power of appointment.
This definition is crucial in trust law as it helps identify trustees who might have a personal interest in the trust’s operations or assets, which could potentially conflict with the impartial and fiduciary role a trustee is supposed to play.
Remember, this is a general interpretation and application may vary based on specific legal contexts or jurisdictions.
For specific legal advice or interpretation, it’s always best to consult with a qualified attorney.
