Trusts specialist at Collas Crill Edward Stone explains how
changes to Jersey's trusts law are good news for the
industry.
Jersey has made changes to its trust law which will come into
force later in 2012.
Jersey is recognised as one of the leading jurisdictions for
wealth management and private banking and the success of
Jersey's trust industry is part of this. The changes will
further enhance Jersey's reputation amongst wealthy families
and their advisors, who already appreciate the experience of
Jersey's trust service providers and the Island's 50 year
pedigree as an international financial centre. For trust
professionals, it also provides practical solutions to some
challenges the industry has faced in recent years.
The most significant changes are designed to ensure that any
issues relating to a Jersey trust are decided in accordance with
Jersey law, rather than the law of a country which may not even
recognise the concept of trusts. Foreign courts, in particular the
English divorce courts, have shown a willingness to use their own
laws to try to modify the terms of Jersey law trusts in favour of
people who may not even be beneficiaries of the trust (e.g. one of
the divorcing spouses). The changes make it clear that foreign
courts will not be able to tamper with a Jersey trust - all issues
must be determined in accordance with Jersey law and any judgments
of a foreign court not based on Jersey law will not be
successful.
Foreign laws are not wholly excluded though, and will have a
continuing role, for example, in determining issues over assets
situated within the foreign court's jurisdiction.
The amendments also enhance and clarify the provisions allowing
the person who creates the trust (the settlor) to enjoy a
continuing say in the administration of the trust without
impeaching its validity. Settlors are often hesitant to hand over
their assets to a trustee and lose complete say over how the assets
are managed; the reservation of some powers can qualm their
hesitation.
Jersey previously introduced non-charitable purpose trusts (i.e.
trusts which do not have individuals as beneficiaries but can carry
out business transactions or philanthropic works). An amendment is
made to redefine "purpose" to clarify that the simple
ownership of assets is a sufficient purpose. The holding of assets,
whether as part of a commercial transaction or otherwise, has
become one of the more popular uses of such purpose trusts but
onshore advisors questioned whether it was a proper purpose; this
amendment puts the issue beyond doubt.
Other amendments will allow trustees to charge reasonable fees
where no charging clause is included in the trust document, and
will allow trustees to contract with themselves. It is a
longstanding principle that a person cannot contract with himself
but this hampers trustees where they act for several trusts for the
same family by preventing them from carrying out transactions
between such trusts (such as a sale and purchase of shares in a
family company).
These changes provide certainty in areas which were previously
questioned and introduce practical solutions, further enhancing
Jersey's position as the leading offshore trust
jurisdiction.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
Specific Questions relating to this article should be addressed directly to the author.
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