STEP Announces Trustees' Liability Exemption Rule

by Robin Pilgrim, LawAndTax-News.com, London

21 July 2006

London-based STEP (The Society of Trust and Estate Practitioners) has announced a practice rule for its members which will ensure transparency by requiring the disclosure of clauses in trusts or wills exempting trustees or executors from liability.

"One of STEP’s primary objectives is to maintain requisite standards for practitioners”, said working party chairman Charles Gothard, "the Practice Rule published by STEP today, following discussions with the Law Commission, protects the public by formalising what is accepted best practice among STEP’s members".

Gothard, a private client partner at City law firm Speechly Bircham, continued “STEP’s Practice Rule results from close involvement with the Law Commission’s consultation on exemption clauses. STEP is highly appreciative of the Law Commission’s recognition of the legitimacy of trustee exemption clauses and resulting decision to emphasise proper disclosure as the best way of protecting the public”.

Executors and trustees seek exemptions from some of the more onerous liabilities that may result from their responsibilities. For instance a trustee of land may be completely unaware of ground pollution but as trustee (whether or not a professional) may be fully personally liable for resulting damage caused to others. Equally, individuals creating trusts or making wills need to protect their interests (and those of the beneficiaries) by being fully aware of any trustee exemptions and their implications.

STEP chief executive David Harvey commented: "Disputes between advisers and clients often focus on liability. The best way of avoiding problems is full transparency, which this Practice Rule achieves. Hopefully, other professional bodies will follow suit to ensure that similar rules of practice become the standard in the private client industry”.

The practice rule can be found at http://www.step.org/showarticle.pl?id=1562

STEP has nearly 12,000 members working across the legal, accountancy, trust, banking, insurance and related professions.

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