Case study: an independent trust review reveals missing minutes

A case study of a trust review is most useful when it shows the order of the work: what was read, what was missing, and what was done about it. The case below is entirely fictional. The people, the structure and the events are invented as an illustration, and any resemblance to a real family or trustee is accidental. It describes one way an independent review can surface missing minutes, and how a trustee in Switzerland can repair the record without rewriting history.

The situation: a trust that seemed to run itself

Imagine a family established in Lausanne. Years ago the settlor created a discretionary trust and appointed a corporate trustee in Geneva. The settlor has since died. Two adult children are now the main beneficiaries, and a long-standing family adviser acts as protector.

Nothing had obviously gone wrong. Distributions were paid, the bank statements arrived, and the trustee answered letters. But one of the children, about to restructure a family company, was asked by a lender to show how the trust had reached its past decisions. The family realised that nobody could say where those decisions were written down.

That question is what prompted an independent review of the existing trust. The family did not want to change trustee. They wanted to know whether the structure was in order before relying on it.

What the review looked at

The reviewer worked from documents, not from impressions. The scope followed the logic of reviewing an existing trust and covered six areas:

• the trust deed and every amendment, including who may appoint and remove the trustee;
• the trustee's minutes and written resolutions for distributions, investments and loans;
• the letter of wishes and whether the trustee had ever revisited it;
• the protector's consents, where the deed required them;
• the trust bank accounts and the trail from each payment to a decision;
• the compliance file: identification of the beneficial owner, reporting under the automatic exchange of information, and the trustee's regulatory status.

The reviewer did not assess the family's personal tax position in any other country. That sits outside a trustee review and depends on where each person lives, so it was flagged as a separate question for local advisers.

Checking the trustee's status first

Before reading a single minute, the reviewer confirmed that the trustee was properly authorised. Under the Financial Institutions Act (FinIA, LEFin, FINIG), a trustee acts professionally when the activity is an independent economic activity carried out to earn a regular income (Art. 3 LEFin). That definition is why a corporate trustee in Geneva falls within the supervision framework, and why the reviewer asked for proof of approval and of the supervisory body. The page on FINMA and SO-FIT approval explains what that status does and does not tell you.

The reviewer also noted that Switzerland recognises foreign trusts and applies the Hague Convention on the law applicable to trusts, in force for Switzerland since 1 July 2007. In this case the deed was governed by foreign law, so the trustee's duties had to be read against that law, with the Swiss framework in the background.

What the review found

The deed was sound. The compliance file was largely current. The weak point was the record of decisions.

The same findings, drawn as a rough picture of how much attention each area needs:

The gauge is a qualitative judgement, not a measurement. It tells the family where to start, not how much risk each gap carries in law.

Why missing minutes matter

A missing minute does not mean a distribution was wrong. It means nobody can easily prove it was right. For a trustee, the written decision is the evidence of a considered, impartial exercise of discretion. Without it, the trustee is harder to defend if a beneficiary complains, and the protector cannot show that a required consent was given at the right moment. The guide on what a trustee owes the beneficiaries sets out the duties these records support.

There was a second effect. The lender wanted to understand past decisions, and a gap in the file made the family look less organised than it was.

How the gaps were repaired

The repair followed one rule: record the truth, with the real date, and never backdate. The reviewer and the trustee agreed on a sequence.

Reconstruct, then record

The trustee's team traced each undocumented distribution back to emails and instructions. Where the protector had given consent by email, those messages were printed, dated and added to the file. Where no evidence survived, the note said so plainly. A candid note to file is worth more than a polished invention.

Ratify honestly

For decisions the trustee still considered correct, it passed a resolution today, stating that it had reviewed the earlier distributions, found them consistent with the deed and the settlor's wishes, and confirmed them. The resolution carried the current date and described itself as a ratification. It did not pretend to be a minute from the time.

For one distribution the trustee was less sure. The trustee told the beneficiaries and the protector, and the question was dealt with separately rather than buried. Whether ratification is available in a given case depends on the deed and on the governing law, so it is a point to confirm with the trustee's legal adviser.

Fix the process

The family and the trustee then agreed three practical changes:

1. a standing agenda for each trustee meeting, covering distributions, investments and protector consents;
2. a rule that every payment out of a trust account must reference a signed decision before it is released (see your trustee and the trust bank accounts);
3. a short annual check, modelled on the annual trust health check.

The letter of wishes was also refreshed with the two adult children, so the trustee now holds current guidance rather than a document written for a different family. See letters of wishes and your trustee for how that works.

Did the family change trustee?

No. This is the point of the case. A review can end in several ways, and replacing the trustee is only one of them. Here the trustee cooperated, the gaps were procedural, and the repair was credible. The family would have reached a different conclusion if the trustee had refused to explain the gaps or had been slow to supply the file. In that situation, switching trustee or staying and fixing becomes a real question, and replacing a failing trustee sets out how that is handled.

Limits of this case

This is a fictional illustration. A real review depends on the deed, the governing law, the countries where the settlor and beneficiaries live, the nature of the assets and the trustee's own procedures. Outcomes differ. Information on this page is general and is not advice for your situation; an individual analysis is needed before you rely on any step described here.