2. Trusts

a. Introduction

The Trusts (Jersey) Law 1984 (Trusts Law) provides a legal framework for the establishment of trusts, for the guidance of trustees and for the protection of beneficiaries. The law is not exhaustive and the Royal Court of Jersey will look to judgments of other courts as being persuasive in relation to certain trust matters, particularly in the absence of any Jersey authority. Extensive amendments were made to the Trusts Law in 2006.

b. The use of trusts

Uses of trusts established in Jersey for individuals include:

  • estate planning
  • avoidance of probate and succession laws
  • asset protection
  • management and devolution of family wealth
  • promotion of charitable and philanthropic causes, and
  • tax planning

The uses of trusts established in Jersey for corporate bodies include:

  • employee benefit structures
  • pension funds
  • securitisation and off-balance sheet financing arrangements
  • acquisition of commercial property using unit trusts, and
  • organisation of private equity investments arrangements.

The most widely used and flexible of trusts is the discretionary settlement, of use in relation to all the purposes set out above. But trusts often take other forms and may be categorised in other ways, such as declarations of trust (with no named settlor), will trusts, purpose trusts (either charitable or non-charitable), fixed interest trusts, unit trusts, pension trusts and employee benefit trusts. And Jersey recognises implied trusts, resulting trusts, constructive trusts and spendthrift trusts.

c. Trust law developments

Although the general law of trust powers and obligations is well-rooted and established, Jersey recognises the need to ensure that this most flexible and accommodating asset in the legal treasury is kept under constant review and enabled to meet the needs of modern times. The Trusts Law was last amended on 26 October 2006 when the Trusts (Amendment No 4) (Jersey) Law 2006 (the Amendment) came into force. The Amendment introduced certain settlor-reserved powers dealing with the level of control and influence a settlor might exercise over the continuing administration of assets placed into trust. Powers that may now be reserved by the settlor include powers to appoint and remove trustees, to amend or revoke the terms of the trust, to appoint or remove an investment manager or investment advisors and to direct the trustees as to investment. The Amendment provides expressly that such clauses do not invalidate the trusts themselves and that trustees who follow any investment direction given (as they would be bound to) are not committing a breach of trust by so doing. Trustees may now delegate any of their trusts or powers if permitted by the terms of the trust so to do.

Other changes included expansion of the scope of ‘exclusion of foreign law’, providing that the validity of a trust governed by Jersey law is not affected by any rights conferred on anyone under a foreign law, and providing for removal of the existing automatic ‘personal guarantor’ provisions for directors of corporate trustees.

It is likely that further amendments will be made to the Trusts Law in 2010. Amendments that are currently under consideration, and discussed more fully in a Consultation Paper dated 22 July 2008, include matters affecting protection and indemnity of retiring trustees, provision for limiting the scope of the duty of disclosure required to be made by the trustees, in appropriate cases, and a review of the definition of charitable trusts.

d. Resources

i. Legislation

Trusts (Jersey) Law 1984 (as amended)

ii. Website

Jersey Legal Information Board

© 2012 Society of Trust & Estate Practitioners