INTRODUCTION
A trustee has a right in equity to be indemnified from trust assets in respect of properly incurred liabilities in administering the trust. To support this indemnity, the trustee has an equitable proprietary interest over the whole of the trust assets to secure the amount to which it is entitled. This interest, frequently described by the courts as an equitable ‘lien’, survives the trustee’s retirement or removal and any successor trustee takes the trust assets subject to the former trustee’s interest. If the value of trust assets in the hands of the successor trustee is insufficient to discharge the amounts due under their respective liens – in other words, where there is an ‘insolvent trust’ – a priority dispute arises. Unlike corporate insolvency and personal bankruptcy which have long been regulated by statute, the insolvency of a trust is administered according to equitable principles …
Allison Silink, Priority between Competing Successive Trustee Liens: The Limits of Judicial Innovation and the Opportunity for Law Reform, King’s Law Journal. Published online: 14 March 2024.
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