Trusts and Trustees

Trusts are generally created by a private document to which the settlor and the trustees are the only parties. The trust instrument does not have to be filed with any public body or registered in Jersey and information relating to the trust is not accessible by the general public. There are however certain exceptions to this, in particular, beneficiaries of a trust may be entitled to financial information relating to the trust. Generally speaking, a trust arrangement can be regarded as highly confidential.

A trust is in many circumstances an effective way to legitimately segregate assets and liabilities, as once the assets are in the trust the settlor ceases to own them. Additionally, it can also provide protection from foreign claims based on, a lack of recognition of the trust, infringement of forced heirship rules (which don’t apply in Jersey) and personal relationships with the settlor. Trusts can also assist continuity of ownership for family assets, protection against profligacy of beneficiaries or family breakdown between the beneficiaries.

The Island offers fiscal neutrality for trusts established for non-Jersey resident beneficiaries and a trust can be of assistance in legitimate tax planning, particularly for those with international wealth. There is also no requirement that any government fees or duty be paid either on the creation of a trust or while it continues in existence. A trust is a flexible way to provide for the succession of family wealth without onerous probate formalities or costs and unlike a Will in certain jurisdictions, it is not a public document. Trusts can also assist with the management of indivisible assets from which a number of beneficiaries benefit.

Jersey is self-governed with a long tradition of political, legal and regulatory stability as well as close links with the EU and the UK. The Jersey Trust Law has been used as a model for similar laws in other jurisdictions. There is a substantial body of judicial authority interpreting the Trust Law and the legal profession in Jersey is well experienced in advising in relation to trusts. The Jersey Courts are recognised as being of the highest calibre and and influential across trust jurisdictions.

Trustees are in a fiduciary position and must exercise their powers only in the best interests of the beneficiaries. The finance industry in Jersey is widely acknowledged as being capable with an excellent service ethos. There is a high quality of services available both to act as trustee but also to enable a trustee to seek financial, investment, tax and legal advice and provide complementary services such as banking.

Jersey has a world class tax transparency framework as part of its commitment to combatting financial crime and tax abuse and complies with transparency and reporting standards across the globe. The trust industry is highly regulated to protect against trusts being used for tax abuse and money laundering.

Where there are no Jersey resident beneficiaries, the trust is only liable to tax on Jersey source income and by concession, Jersey bank deposit interest is not treated as Jersey source income when received by trustees of such trusts.

No forced heirship laws, an ability to appoint protectors for additional oversight over the trustee(s), no rules against perpetuities (i.e. a Jersey trust can exist for an indefinite period), ability to add assets/beneficiaries, retention of benefits/ powers by settlor, “flight” clauses (i.e. an emergency affecting trustees), can be expressed to be revocable or irrevocable and an ability to change the governing law of the trust from or to Jersey if it is valid under the other relevant foreign law.

If the trustee and the assets are in a stable jurisdiction like Jersey, a trust can provide protection for a settlor who is based in a potentially unstable environment or politically uncertain jurisdiction with risks of exchange control or sequestration.

The Law provides that when considering questions relating to the trust or transfers of property to it, the court must apply Jersey law only and that no consideration should be given to any rule of foreign law. Any foreign claim based on a lack of recognition of the trust machinery will be ignored by the court. The Jersey courts can also have jurisdiction over ‘foreign trusts’ and related issues would be determined in accordance with the relevant foreign law.