The office of trust enforcer, is a non-beneficial power holder in the context of private purpose trusts, and exists for the sole purpose of monitoring the trustee’s activities and the performance of the purpose of the private trust.
The private purpose trust, which exists to facilitate the achievement of a specific purpose, has increasingly been used in the commercial context to provide a means of asset securitisation or to take
transactions off the balance sheet of a company. Private purpose trusts also have many valuable estate planning and commercial uses, such as enabling one to set up a trust which contains both philanthropic and charitable purposes, to separate voting rights from economic control, to hold shares of a private trust company, to purchase assets or to finance transactions to provide security for an entity which then finances the purchase. The office of enforcer, a valuable tax-planning tool, provides a layer of confidentiality and flexibility to the tax-planning process.
Due to the absence of beneficiaries in a private purpose trust, an enforcer must be appointed to oversee the trustees – to ensure that the trust is administered to satisfy the purpose for which it was established.
The introduction of the office of enforcer is intended to overcome the historic objection to private purpose trusts. An enforcer takes over the traditional role of a beneficiary in an onshore personal trust – compelling
an accounting by the trustee or bringing an action against the trustee when due and proper administration of the trust is not satisfactorily performed. The appointment of an enforcer is considered crucial in ensuring that trustee conduct is monitored, and any fraud and fault on the part of the trustee is remedied as soon as possible. The appointment of an enforcer thus provides the settlor with an additional
layer of security.
