Successor trustee: definition and practical meaning

The short successor trustee definition is this: a successor trustee is the individual or company that takes over the administration of a trust after the previous trustee has retired, died, been removed or lost the capacity to act. The role does not create a new trust. It keeps the same trust deed, the same assets and the same beneficiaries, and changes only the person holding legal responsibility for them.

The terms below are those you are most likely to meet when you choose, assess or replace a trustee in Switzerland. They explain the vocabulary of the trustee's role, not tax or jurisdiction questions, which depend on your own situation and call for an individual analysis.

A

Accounts (trust accounts)

The written record of what the trust owns, what it has received and what it has paid out. A trustee prepares them so that beneficiaries, the protector and any reviewer can follow what has happened. What you are entitled to see depends on the trust deed and the applicable law; see what information your trustee must give you.

AMLA (anti-money laundering act)

The Swiss legislation on combating money laundering, known in German as GwG and in French as LBA. A trustee has to identify the people behind a trust and understand where the assets come from. Under the financial institutions rules, supervision of this duty is linked to affiliation with a recognised body.

Annual audit

Trustees authorised under the Swiss financial institutions framework are audited every year by an audit firm, as set out in Art. 62 FinIA. The audit looks at the trustee's own compliance, not at whether each decision about your family trust was the right one. It is one input among several when you assess a trustee.

Appointment, power of

The power to name a trustee, whether the first one or a replacement. The trust deed says who holds it: sometimes the settlor, sometimes a protector, sometimes the existing trustee. When a successor must be found, this power decides who actually makes the choice.

B

Beneficial owner

In the trust context, a person who ultimately benefits from, or controls, the assets for anti-money-laundering purposes. A trustee must record these individuals, which can include the settlor, the beneficiaries and a protector. See beneficial owner for the practical meaning.

Beneficiary

A person, or sometimes a charity, for whose benefit the trustee holds and uses the trust assets. In a discretionary trust beneficiaries have no fixed entitlement; in a fixed interest trust their shares are set by the deed. A change of trustee should not alter what beneficiaries are entitled to.

Breach of trust

A failure by the trustee to act as the deed and the law require, for example by using assets for the wrong purpose or ignoring a duty to inform. A breach may lead to a claim by beneficiaries or to the trustee's removal. Whether an act is a breach depends on the deed and on the facts.

C

Co-trustee

One of several trustees who hold the assets together and usually decide jointly. If one co-trustee leaves, the others may continue while a successor is found, depending on the deed. See one trustee or co-trustees for how the two models compare.

Corporate trustee

A company, rather than a person, acting as trustee. In Switzerland a trustee based in the country must be a sole proprietorship, a commercial company or a cooperative, entered in the commercial register (Art. 18 FinIA). A company continues beyond the life of any one employee, which is why it is often chosen as a successor.

D

Deed of retirement and appointment

The document by which an outgoing trustee steps down and a new one is appointed, often in the same instrument. It records the transfer of the assets and the new trustee's acceptance of the role. See deed of retirement and appointment.

Discretionary trust

A trust in which the trustee decides whether, when and to whom to make distributions among a class of beneficiaries. Because the trustee's judgement matters so much here, the choice of a successor deserves particular care.

Duty of care

The standard of diligence a trustee owes in managing the assets. Swiss financial institutions law frames it in part by requiring the trustee to manage the segregated assets, protect their value and use them in line with their purpose (Art. 19 para. 2 FinIA).

E

Exculpation clause

A clause that limits the trustee's liability for certain mistakes. It does not usually cover serious misconduct, and its reach varies with the deed and the law. A successor should read it before accepting the role. See exculpation clause.

F

Fiduciary duty

The obligation to act in the interests of the beneficiaries and not for the trustee's own benefit. It underlies decisions on distributions, conflicts of interest and record-keeping. A successor trustee takes on this duty from the moment of appointment.

FinIA (FINIG / LEFin)

The Swiss Financial Institutions Act. It treats trustees as financial institutions alongside asset managers, managers of collective assets, fund management companies and securities firms (Art. 2 para. 1 let. b). Under Art. 17 para. 2, a trustee is someone who, on a professional basis, manages segregated assets or disposes of them for a beneficiary or a defined purpose under a trust deed within the meaning of the 1985 Hague Convention.

FINMA

The Swiss Financial Market Supervisory Authority. It grants the authorisation to act as a trustee, while day-to-day checks are carried out by a supervisory organisation that FINMA itself authorises and oversees. It keeps public lists of the trustees and bodies concerned. See FINMA and SO-FIT.

Fixed interest trust

A trust in which the deed fixes each beneficiary's entitlement, so the trustee has little room to choose between them. The successor's task is mostly administrative, but the duties of care and reporting remain.

H

Hague Convention

The 1985 Hague Convention on the law applicable to trusts and on their recognition. Swiss law refers to it for trusts (Art. 149c PILA), while Art. 15 of the Convention keeps mandatory inheritance rules in place. Which rules apply to your trust depends on its terms and on where you and your family live.

I

Individual trustee

A natural person acting as trustee. The role then depends on one person's health and availability, which is why the deed should name a successor. See your individual trustee has died or retired.

Irrevocable trust

A trust the settlor cannot simply undo or take back. Once set up, the assets belong to the trust, and a change of trustee has to follow the deed or a court or agreed process rather than the settlor's wish alone.

L

Letter of wishes

A non-binding note in which the settlor tells the trustee how they hope discretion will be used. A successor trustee should receive it with the trust file, so continuity of intention is preserved. See letter of wishes.

O

Oversight body (supervisory organisation)

An organisation authorised by FINMA to carry out ongoing supervision of trustees and asset managers. Facts that change at the trustee must be announced to it in advance. SO-FIT, OSIF and others are among the bodies named on the FINMA list.

P

Private trust company

A company set up to act as trustee for one family's trust or related structures. Family members often sit on its board, and a professional provider may support it. A private trust company can also be a route to continuity, since the company remains while individuals change.

Protector

A person appointed to oversee the trustee, often with powers such as approving distributions or replacing the trustee. The deed defines the powers and their limits. A protector is frequently the one who chooses the successor. See protector.

R

Removal of trustee

The ending of a trustee's role against their will, by use of a power in the deed or through a court. It is different from retirement because the trustee does not choose to leave. A successor is normally appointed at once to avoid a gap in administration.

Reserved powers

Powers the settlor keeps for themselves, such as approving investments or naming a new trustee. They can help the settlor retain influence, but too many may blur who is actually in charge of the trust. See reserved powers.

Retirement of trustee

A trustee's voluntary departure, usually under a clause in the deed that sets the conditions. The trustee should hand over the records and assets in an orderly way to the successor.

Revocable trust

A trust the settlor can end or amend. The trustee still manages the assets, but the settlor retains a degree of control, which may affect how the trust is treated for other purposes.

S

Segregated trust assets

The property held in the trust, kept separate from the trustee's own assets. Swiss law uses this notion in defining the trustee's activity, and the trustee must keep that property identifiable throughout. On a change of trustee these assets move to the successor intact.

Settlor

The person who creates the trust and transfers assets to it. In German, the Errichter; in French, the constituant. See settlor.

SO-FIT

A non-profit association authorised by FINMA. It acts both as a self-regulatory organisation for anti-money-laundering purposes and as a supervisory organisation for asset managers and trustees. Several such bodies exist; the one a trustee belongs to is shown in the FINMA list.

Successor trustee

The person or company who replaces the current trustee when that trustee retires, dies, is removed or can no longer act. The successor may be named in the trust deed in advance, chosen by a protector or the settlor, or appointed later by agreement or by a court. The successor accepts the existing deed, takes over the assets and records, and owes the beneficiaries the same duties as the predecessor.

In practice, the quality of a handover matters as much as the choice of name. A good successor reviews the deed, the past decisions, the letter of wishes and the bank accounts before accepting. Read more in changing trustee step by step and in continuity planning when the trustee is not there.

Example: a family established in Lausanne has a trust run by a single individual trustee who is about to retire. The deed names a corporate successor, so the transfer follows an agreed route and the family spends its time reviewing the file rather than arguing over who should act.

T

Transfer of trusteeship

The process by which the office of trustee, with the assets and records, passes to the new trustee. It usually involves a deed, updated bank documentation and notification of the people concerned. It does not by itself change the beneficiaries' rights.

Trust deed

The founding document that sets out the trust's purpose, the powers of the trustee and the protector, how a trustee can be replaced and who benefits. It is the first thing a successor reads, and the main reference in any dispute.

Trustee

The person or company that holds legal title to the trust assets and administers them for the beneficiaries or for a stated purpose. In Switzerland, professional trustees are subject to FINMA supervision (Art. 61 FinIA). An activity counts as professional when it is an independent economic activity carried out to earn a regular income (Art. 3 FinIA).

W

Winding up

The closing of a trust once its purpose is achieved or the deed requires it. The trustee settles liabilities, accounts for the assets and distributes what remains. A successor who inherits a trust near its end may handle this stage.