Change of trustee in Switzerland, step by step

A change of trustee is a legal transition before it is a practical one. One person or company stops administering the trust assets, another takes over, and the trust itself carries on without interruption. Whether that is possible, who may trigger it and what must be handed over are all questions that the trust deed answers first. Everything else, from the incoming trustee's approval to the signature cards at the bank, follows from it.

This guide explains the route in the order in which it is usually travelled. It assumes that you are a settlor, a protector, a beneficiary or an adviser who already knows that a change is under consideration. If you are still asking whether to change at all, the comparison of switching trustee or staying and fixing the relationship is the better starting point. What follows is general information, not advice: the right route depends on the wording of your deed, the governing law of the trust, the assets and the people involved, and it needs an individual analysis.

Start with the deed: does it allow a change at all?

Every change of trustee begins with one document, the trust deed, together with any supplemental deeds, amendments and side documents that have modified it since the trust was created. Before anyone talks to a new trustee, someone has to read those documents closely and answer four questions.

Who has the power to remove the trustee?

Many deeds give the power to remove and appoint trustees to a named person. It may be the settlor, a protector, a committee, or the beneficiaries acting together. Some deeds give it to the existing trustee alone, which is the weakest position for anyone who wants a change. Others say nothing, in which case the governing law of the trust supplies a default route, and that route may involve a court.

Who has the power to appoint the successor?

Removal and appointment are often held by different people. A protector may be able to remove a trustee but need the settlor's consent, or the retiring trustee's agreement, before a successor takes office. A deed may also limit the field: for example, it may require the new trustee to be a professional, to be regulated, or to be independent of the family.

Is there a condition or a formality?

Some deeds require notice to the trustee, a written resolution, a period of consultation, or the consent of a majority of adult beneficiaries. Others require that the successor accept office in a particular form. A change that ignores such a requirement can later be challenged, and a challenge years afterwards is the most expensive way to discover a drafting point.

Does the deed restrict the move itself?

A deed may contain an "ipso facto" clause that ends a trustee's office in certain events, or a clause that ties the seat of administration to a particular place. A transfer to a trustee in Switzerland may therefore need a change in the administrative provisions, not only a change of name. If the trust was created abroad and is being brought to a Geneva trustee, the separate guide on bringing a foreign trust into trusteeship in Switzerland covers the particular points of that case.

If the answers to these four questions are clear, the change is mainly an administrative project. If they are unclear, the first task is not to select a new trustee but to settle the legal basis, sometimes with the help of counsel in the jurisdiction whose law governs the trust.

Who can do what: a summary of the usual powers

The table below shows the typical allocation of powers and the practical point to check. It is an illustration of common drafting, not a statement about your deed.

The role of each participant is discussed more fully in the piece on the trustee, protector and beneficiary triangle. In practice, the table shows why two trusts that look similar can need very different routes: the same words, "the protector may appoint a new trustee", can be limited by a consent requirement elsewhere in the deed.

The route in eight steps

The diagram sets out the sequence. Not every trust needs every step, and some steps run in parallel, but the order of the first three matters: the legal basis comes before the choice, and the choice comes before any signature.

Step one: decide, and write down why

A change driven by a family decision is easier to defend than one driven by an argument. A short note that records who proposed the change, what problem it addresses and which powers are being used does not need to be elaborate. It matters later, if a beneficiary asks why the trustee was replaced, or if the outgoing trustee disputes the grounds. If the trigger is poor service, silence or concern about the way the trust has been run, the guide on replacing a failing trustee looks at how to build the file before you act.

Step two: read the deed and every amendment

This is the step described above, and it should be done by someone who has the full set of documents. Missing supplemental deeds are a frequent problem in older trusts. If a document cannot be found, say so at the start, because the new trustee will ask for it, and a gap in the chain of deeds is something the incoming trustee must understand before accepting office.

Step three: choose the incoming trustee

Choosing is a project in its own right. It involves approval status, experience with the kind of assets in the trust, how decisions are made, how the trustee communicates with the family and whether it has any conflict with the people involved. Work through the questions in due diligence on your trustee with each candidate, and keep the answers in writing. Where a Swiss trustee is considered, the approval position matters in a specific way, described below.

Step four: open the client file

A regulated trustee cannot simply accept a trust by signing a document. It has to identify the settlor, the protector, the beneficiaries and anyone else who controls the trust, understand where the assets came from, and record the purpose of the structure. This work is driven by anti-money-laundering rules (LBA / AMLA / GwG) and by automatic exchange of information requirements (EAR / AEOI / CRS). Expect to be asked for identity documents, proof of address, source of wealth information and an explanation of the history of the trust. The more complete your answers are, the shorter this step.

Step five: sign the deed of retirement and appointment

The central legal act is usually a deed of retirement and appointment, a single document or a pair of documents in which the outgoing trustee retires, the incoming trustee is appointed and accepts, and the people who hold the power of appointment confirm that they have used it. The glossary entry on the deed of retirement and appointment explains the parts of the document.

Points that are commonly negotiated at this stage include:

• the effective moment of the change, so that there is never a gap in which nobody is trustee;
• the outgoing trustee's release or indemnity, and whether the deed limits it;
• an undertaking to hand over records and to cooperate with the transfer of assets;
• the treatment of any claims that have already arisen against the outgoing trustee;
• who bears the outgoing trustee's reasonable costs of the handover.

A release deserves care. An outgoing trustee will often ask for one, and signing it without a review of the accounts closes a door that may be hard to reopen. If the family has doubts about how the trust was run, the review should come before the release, not after.

Step six: hand over the records

The records are the memory of the trust. A complete handover includes the trust deed and all amendments, the register of trustees and the past deeds of appointment, the minutes and resolutions, letters of wishes, the accounts, correspondence with beneficiaries, the files of any underlying companies, tax and reporting filings, and the instructions given to banks. The checklist of the handover file from the outgoing trustee lists these items in more detail.

A frequent difficulty is that an outgoing trustee holds records on its own systems and is reluctant to release them quickly. A properly drafted deed of retirement sets a timetable and describes the form in which the records must be given. Where the outgoing trustee is also an individual who has died or become unable to act, the records may have to be traced through the family, the lawyers or the former administrator.

Step seven: transfer the assets

Trust assets are held in the name of the trustee, so a change of trustee means a change of title. For bank accounts, securities and cash, this is done through the bank. For shares in companies, the share register and any related documents are updated. For real estate, a land registry entry or an equivalent formality may be needed, and local rules and local costs will apply. For other assets, such as insurance policies, art or digital holdings, there are specific transfer routes. Each type has its own sequence and its own risk of delay, and an inventory made at the start of the project avoids surprises at the end.

Step eight: update the banks

The last step is where many changes slow down, because every institution runs its own checks. The incoming trustee needs its own relationship with each bank: new account opening or transfer documentation, new signatories, an updated declaration of the beneficial owner and controlling persons, and fresh tax classification forms. The earlier signatories have to be removed in a controlled way, so that no old mandate stays active. The separate page on your trustee and the trust bank accounts explains how banks view a trust account and what they usually require.

What the incoming Swiss trustee must be

If the successor is to be a trustee based in Switzerland, the regulatory framework adds a layer that you can check before you sign anything. Under the Financial Institutions Act (LEFin / FinIA / FINIG), a trustee is someone who, on a professional basis, manages a separate pool of assets or disposes of it for a beneficiary or for a stated purpose, on the basis of a trust deed within the meaning of the 1985 Hague Convention on trusts (Art. 17 para. 2 LEFin). Trustees are financial institutions in the same family as asset managers (Art. 2 para. 1 let. b LEFin).

Several features of the regime are relevant when you compare candidates:

• A trustee with its seat or domicile in Switzerland must be a sole proprietorship, a commercial company or a cooperative, and be entered in the commercial register (Art. 18 LEFin).
• The management must include at least two qualified persons, with adequate training and sufficient professional experience (Art. 20 LEFin).
• The minimum capital for asset managers and trustees is CHF 100,000, paid in cash, and appropriate security or professional liability insurance is required (Art. 22 LEFin).
• The trustee must manage the separate assets, maintain their value and use them in line with their purpose (Art. 19 para. 2 LEFin).
• Trustees are subject to FINMA supervision, which involves a supervisory organisation; day-to-day supervision is carried out by supervisory organisations that hold a FINMA authorisation (Art. 61 LEFin), and an annual audit by an audit firm applies (Art. 62 LEFin).

In practice, FINMA grants the authorisation, while an organisation de surveillance checks continuing compliance. Changes in the facts on which the authorisation rests must be reported to that organisation in advance. FINMA publishes a list of the asset managers and trustees that are authorised and supervised through a supervisory organisation, and lists the organisations themselves, which include SO-FIT, a non-profit association authorised by FINMA that acts both as an anti-money-laundering self-regulatory body and as a prudential supervisory organisation. The page on what FINMA and SO-FIT approval means for you explains how to read these lists.

Approval is a baseline, not a quality label. It tells you that a trustee has met the organisational and professional requirements; it does not tell you whether the trustee is the right match for your family, your assets or your jurisdiction. That judgement belongs to the selection step.

Records, minutes and the duty to hand over

A trustee who takes office inherits the history of the trust. That is why the quality of the records often decides how smooth a change will be. A new trustee will usually want to be able to answer a few simple questions from the documents alone: what is the structure, what has been decided and why, which distributions have been made, which powers have been exercised, and who has been told what.

Gaps are common. Minutes may be missing for years when nothing happened. Decisions may have been taken by email and never recorded. A letter of wishes may exist in several versions. None of these gaps is fatal, but each should be identified and acknowledged in the handover instead of being discovered later. An independent review of the trust, carried out in parallel, often produces the list. For a structured way to do it, the page on reviewing an existing trust in ten questions can be used as a working outline.

There is also a practical question about confidentiality. Records contain personal data about beneficiaries and sometimes about third parties. The handover should go from trustee to trustee through a controlled channel, and not be copied to family members unless the deed allows it.

The bank mandate in practice

Banks treat a change of trustee as a change of the person who controls the account. That triggers a new review, even if the assets have been at the same institution for years. Expect the bank to ask for the signed deed of retirement and appointment, a certified copy of the trust deed or an extract, identification of the incoming trustee and its authorised signatories, confirmation of its approval status, and updated information on the settlor, the protector and the beneficiaries.

Three practical points save time:

1. Ask each bank for its list of documents before the deed is signed, not after.
2. Agree an effective moment with the outgoing trustee so that payments and standing instructions do not fall into a gap.
3. Record in writing which old mandates are cancelled and when, and keep the bank's confirmation in the trust file.

If the assets move to a new custodian at the same time as the trustee changes, treat these as two projects that happen to coincide. The investment mandate, the custody arrangement and the trustee appointment each have their own approvals.

Example: a change led by the protector

An illustration with fictional people. A family established in Lausanne holds a discretionary trust created many years ago by the late founder. The deed names an individual trustee, a professional based abroad, and a protector, the founder's eldest daughter. Over several years the trustee has become slow to reply, distributions are delayed and the family has not received accounts for a long time.

The protector does not start by approaching new trustees. She first reads the deed with a lawyer. It gives the protector the power to remove the trustee and appoint a successor, but only after written notice and only if the successor is a regulated professional. She notes that the deed also requires the protector to consult the adult beneficiaries, though not to obtain their consent.

She then records the reasons for the change in a short memo, speaks to the beneficiaries and puts the notice in the form the deed asks for. Next, she approaches a small number of candidates, asks each of them the same set of questions on approval, experience and independence, and chooses one. The incoming trustee completes its client file, asking for the history of the structure and the source of the assets. A deed of retirement and appointment is prepared; the outgoing trustee agrees to retire on the condition of a release, and the protector asks for the accounts first. Once these are provided and reviewed, the release is limited to what has been reviewed.

The handover then takes place in stages: first the deeds and minutes, then the accounts, then the banks. The final bank mandate is updated only when the new trustee has the full set of documents. At each step, the protector keeps a short log, which later becomes the first page of the new trustee's file.

The example shows three things: the protector's power is real but conditional, the order of steps matters, and the release is a negotiating point and not a formality. Your own deed may allocate powers differently, which is why the first step is always a reading of the document.

What commonly goes wrong

Problems in a change of trustee tend to repeat. They are usually avoidable if they are known in advance.

• Acting before the deed has been read. A notice sent by the wrong person, or in the wrong form, can make the change open to challenge.
• Choosing on approval alone. A trustee can be approved and still be a poor match for a family business, a property portfolio or a beneficiary who needs particular care.
• Signing a release too early. Once the outgoing trustee is released, remedies may be narrower. Review first.
• Leaving the records until last. The new trustee cannot take decisions on documents it does not have, and the outgoing trustee has less reason to hurry once it has been paid and released.
• Forgetting the small accounts. A forgotten account or policy stays in the former trustee's name and becomes a problem years later.
• Ignoring tax and reporting consequences. A change of trustee can alter reporting positions for the trust and for the people connected to it. The result depends on the country of residence of the settlor and the beneficiaries and needs individual analysis.

A longer list is given in the page on common mistakes when changing trustee, which complements this guide.

A short checklist before you start

• Collect the trust deed, every amendment and every deed of appointment
• Identify who holds the power to remove and appoint, and on what conditions
• Write down the reasons for the change and who supports it
• Shortlist candidates and ask each the same written questions
• Check the approval status and supervisory organisation of each Swiss candidate
• Prepare the documents the incoming trustee will need for its client file
• Ask the banks for their change-of-trustee requirements
• Agree the handover list and a timetable with the outgoing trustee
• Review the accounts before any release is signed

For a fuller list of papers to assemble, see the checklist of documents to gather before changing trustee.