US Private Wealth Network Podcast Series

Philip: Hello everyone and welcome to the Jersey Heard Podcast. I’m Philip Pirecki, the Americas lead for Jersey Finance and your host for today’s show. This episode is the first of a three-part series where we will explore how global wealth trends are reshaping the private wealth landscape and how Jersey fits into the picture.

Now we’re joined today by Steve Sokić and Darrell King from Crestbridge Fiduciary, both well known to the global family wealth management community. Steve is the Chairman of Crestbridge Group and has more than 30 years steering trust, fiduciary and family office strategies for the world’s wealthiest families.

Steve has led private client divisions at many firms. Darrell is the Managing Director of Crestbridge Fiduciary in the Americas and based right here in New York City, bringing with him over 30 years of hands-on expertise with ultra-high-net worth families. Darrell has held managing director roles also at many firms and both have spent their careers handling cross-border matters.

Steve and Darrell, it’s an absolute pleasure to have you both and welcome to the podcast. First, let’s set the scene because the world of wealth is changing faster than ever. We’re seeing unprecedented growth in global and US assets. The largest intergenerational wealth transfer in history. Families with members and assets scattered across borders and asset classes, a huge move into alternatives, digital assets and impact investing, the rise of family offices, more women and NextGen in decision-making roles and regulation and compliance that just keeps getting heavier. Darrell, given all of that, how are these macro shifts actually changing what private clients and family offices need from their trust and structuring partners?

Darrell: Philip, today, families are much more global than they have been in the past with family members in multiple countries so they need structures that cross-borders and providers that understand both the US environment and the offshore world and how to effectively administer family trusts in both of those environments.
Further, US trust law continues to evolve, so wealthy families now look at the US like they do at other non-US jurisdictions to see which jurisdiction provides the better solution in their circumstances. US families also are increasingly thinking about how a foreign jurisdiction can support their objectives.
Jersey’s been operating in that global space for decades. It’s a trusted global solution. Let me give you a couple examples. First of all, inbound foreign clients often have children in the US and so utilising a US Situs Trust to provide a tax efficient and effective wealth transfer mechanism for the ultimate benefit of those children is often the right choice for mum and dad. States like Wyoming, for example, have statutes that support flexibility and the design of that structure. Now, let me give you an outbound example. Wealthy US families that have created substantial wealth with all of it in the US are increasingly thinking about geographical and investment diversification as part of the risk management strategy that translates to the moving of a small portion of that overall wealth to a structure outside the US to provide protection of assets, diversification into non-US dollar investments and an estate transfer mechanism. Jersey is well suited for this.

Philip: Just picking up from that last point, can you give us a quick picture of what is happening in US Trust law over the past couple of decadesand why has there been an explosion of trust businesses or business in certain states?

Darrell: Sure, absolutely. Let’s look back about 25 years. The Uniform Trust Code was first adopted by many states, not all, but many in fully or partly back in 2000. Here in the US that triggered competition among states for out-of-state trust business. The “big five” trust states, Wyoming, the Delaware, South Dakota, New Hampshire and Nevada went a STEP further beyond just the implementation of the Uniform Trust Code. They began to update and further modernise their trust law to create flexibility and to foster economic growth. Wyoming, for example, adopted the UTC in 2003, but since then there has been over a hundred substantive changes to provide flexibility in planning and to meet evolving client needs. Let me give you some examples of the modern trust provisions that they brought in. For example, the power to direct the trustee on investments, to appoint a distribution advisor, the ability to establish self-settled asset protection trusts and abolishing or extending the rule against perpetuities, plus borrowing from the offshore world, the recognition of trust protectors, purpose trusts and private trust companies. So the great thing about this evolution is that these powers can be assembled as necessary to meet clients’ particular goals without affecting the integrity of the trust as an effective asset preservation wealth transfer mechanism. Also, the other thing that a few of those big five states have done has created specialist trust courts to hear trust matters. So taken altogether, these states have adopted similar to offshore centres, drivers that create innovation competition and that attract capital.

Philip: That’s fantastic, Darrell and the two real life examples really drive it home. Steve, you’ve worked in and around Jersey for many years. Does this evolution in the US sound familiar to you?

Steve: Absolutely. It’s been a form of mutual evolution, similar drivers yet different triggers and so yes, there’s been many parallels with a number of US states in regard to Jersey’s development but perhaps on a different timeline and perhaps different triggers. For example, Jersey introduced many of the features that Darrell just spoke about, things like reserve powers as they’re known outside the United States, or settler directed powers as they’re known in the United States, or other things like perpetuity periods, purpose trusts, etc. Jersey also shares the benefit of tax neutrality as a number of US states offer as well. And the changes that have happened in both those US states and in Jersey are both driven by the similar or in some cases, same global wealth trends and client demand for flexibility and in essence to keep pace with the increased focus on enhanced wealth governance mechanisms that have evolved over the last 20 or 25 years as Darrell mentioned. Now, having said that, there’s arguably also some key differences. The United States, of course, has 50 states. A number of them have as Darrell said, embraced the trust industry. Whereas Jersey’s under one consistent legal framework it’s a lot simpler in that context. Jersey is very long established. It really started in the early sixties in terms of the trust industry growth and so that’s a lot of years and fast forward to today and it’s truly and globally recognised in particular for its trust law and its reputable and deep judiciary. And also perhaps in part because of its geographic location, but also for the other attributes that I’ve mentioned and will go on to mention, Jersey’s very well suited for international families that are spread across different countries as well as their investments versus the US where it’s sort of state-by-state selection. And I think, also Jersey’s earlier adoption of not only trust codified trust law.

Also it’s years of case law testing that those statutes and continuing to ensure clarity gives it a real big advantage. And also, Jersey’s seen as a neutral and internationally respected and that again brings quite a lot of value, particularly again to those cross-border international families.

Philip: Steve, that contrast between one consistent framework and 50 different state laws is so important for international families. You’ve touched on how many of the features we now see across US states actually showed up in Jersey’s trust law decades ago. I’d like to talk more about that and also how Jersey has managed to stay ahead of the curve. But could I just bring up one point that you’ve raised previously and the years of case law? Is there a way to measure the depth of case law? Does Jersey have the deepest case law and why does that matter?

Steve: I’ll give some context. I will answer the question, but I’ll give some context for a moment. In terms of the framework in Jersey and this will help understand the answer to your question around case law. First of all, Jersey is not part of the U. It has its own legal system based on English law principles, including its own independent judiciary with the highest court of escalation being the Privy Council in London, which applies Jersey law and all the cases that ever gone to the Privy Council have applied Jersey law. So there’s good track record in that respect. So having the comfort of independent judiciary, applying the rule of law is really important. That, in part answers your question, but I’ll, but I’m going to give some additional context. I mentioned modern trust law. The first codified version that brought it all together in Jersey came into effect in 1984. So that’s well before most modern US State Trust law. It’s around 15 to 17 years before, so Jersey had quite a head start in this trust sector, which then again gave it years for the courts to ensure that that codification, that those statutes are properly interpreted and applied. And I think it’s also useful to mention since you brought up the judiciary and the depth of an amount of trust cases. This gives clients and their families and advisers for that matter, some good comfort again around the rule of law. It’s all well and good to have good statute. It’s even better and more important, arguably to have that court system behind it and ensuring that the rule of law does actually happen in practice.

Philip: Steve, if I could just pick up this one point, the idea that the highest court of escalation is the privy counsel, that you have this reputation and the depth of the experience in the judiciary. Those sound great, but how do those translate those characteristics and some of the other points that you’ve mentioned translate into real world value for US families and advisers?

Steve: I’ll give you a few examples. In fact last week I was, in Milan with a few advisers and we were chatting about the differences between the court assistance in the United States and Jersey and a few real practical points arose as well in response to your question. Now, Jersey, we can get into the quantitative side in terms of number of cases, which I, Jersey does have the largest number of trust cases in the world, given the focus Jersey has in the finance sector and particular around the trust sector. But another important difference is the court system itself as well. If I contrast with the United States and the United States has unfortunately in my view, quite a lot of frivolous type litigation. It’s the way litigation is structured in the United States, it’s different. Whereas in Jersey, if things do come before the court or when they come before the court normally speaking, they’re a serious nature. And because the attributes of the legal environment or the court environment in the United States and Jersey are different. So if you want to litigate in Jersey, you have to come to Jersey retain counsel, which are called Advocates Post, what would be, I guess known in the United States as a bond. So there, there has to be quite a bit of commitment to proceed with litigation in the courts. The other thing I would add which is also in contrast to many US states is the Royal Court, as it’s known in Jersey, it’s openness and its proven track record of being open to hearing direction requests from trustees and other parties where things get quite complicated or around interpretation perhaps for example. The court is very open to submissions around providing direction in those kind of complex areas. But I think it goes beyond the courts. The courts are very important and I think that gives a lot of people comfort. But there’s also, there’s other attributes like the regulatory environment for example, which, to your question, what is the real value to clients? The regulatory environment and controls is essentially another sort of check and balance for families. That their trustees and perhaps other providers or advisors in Jersey there is this other secondary check on them and Jersey’s regulatory environment has gone through quite an evolution as it has in the United States, but I think Jersey has been at this a little longer and that, that regulatory story has evolved. And so for example, in Jersey we had the visit by MONEYVAL on behalf of the Financial Action Task Force (FATF), around having a very close look at our regulatory framework and environment. And I was quite pleased with that result. It was essentially, broadly speaking, a clean bill of health. So I think, again, to your question around comfort for practical cover, real life cover to families, that’s another example.

Philip: Thank you Steve. If you allow me, I just want to pull some of these thoughts together for a moment. So we’ve touched on a number of things so far. We’ve discussed Jersey’s stability, its predictability. You did mention its tax neutrality. The courts, the. Regulatory environment, the depth of case law, which we could broadly paint as a deep pool of experience. There’s a strong legal infrastructure which gives us advisors confidence in the jurisdiction and this all within a globalised family or a globalising family, or maybe perhaps better put the globalisation of people. Assets where increasingly you need to have robust jurisdictions as a platform in which you should be structuring. Is there anything that I’ve missed in that summary that you think I should include?

Steve: I think you summarised it quite well. I think I would only add a couple of sort of antidotes or examples or points. A fun fact for you, in Jersey, one quarter of the Island’s population is employed in finance. That’s a, that’s quite a large proportion obviously showing its dedication to the finance sector, which includes 1,200 STEP members. That’s roughly 1.2% of the population. That’s like New York having, I think, circa 260,000 STEP members. The STEP being, of course, the society of trust and state practitioners, showing again, that deep focus and that deep bench of professionals on the island. And I think I can go on about statutes is again, most of what Darrell mentioned. Also applies, I would expand it slightly by also adding things like firewall provisions, ensuring that Jersey law prevails in any question of validity or dispute rather than some other jurisdictions laws and the last thing I think I would mention is Jersey has a long connection with the United States, not only in these evolutionary trends, but also working with US families. Understanding the way business is done, but also practical and important things like, tax compliance as well. So that history of dealing with Americans and American connections I think is also quite important,

Philip: That last point is a fantastic point and one that is often overlooked, particularly from a domestic perspective when going offshore. The familiarity with working with the US, it does matter. With that, Steve and Darrell, thank you both for a terrific first episode. We’ve only just scratched the surface, but I hope everyone can already see how quickly the lines are blurring between onshore and offshore solutions. To explore Jersey’s private wealth proposition further, please visit jerseyfinance.com and get in touch. Thank you again for listening. Bye.

Wealth is growing quickly, especially in the United States, and families are more international than ever. Their assets stretch across countries and include traditional investments, as well as alternatives, digital assets and impact investing. At the same time, family offices are expanding, women and rising generations are taking larger roles in decision making, and regulation is becoming more complex. All of this is driving demand for modern cross-border planning.

Families often live in multiple countries and need structures that work cleanly across borders. They rely on advisers and trustees who understand both the US environment and offshore jurisdictions, and who can administer trusts effectively in each. US trust law continues to evolve, and wealthy foreign families now view the US in the same way they view other non-US jurisdictions, comparing which one best fits their needs. US families are also looking outward and considering how a foreign jurisdiction can support their objectives.

The Uniform Trust Code (UTC) was adopted beginning in 2000 and now 38 states have adopted it fully or partly. This has sparked competition among states for out-of-state trust business.

The states often described as the ‘Big Five’ for trust work, including Wyoming, Delaware, South Dakota, New Hampshire and Nevada, updated and modernised their trust laws to increase flexibility and support economic growth. Wyoming adopted the UTC in 2003 and has since made more than 100 substantive changes.

Modern provisions include directed investment powers, the ability to appoint a distribution adviser, self-settled asset protection trusts, abolished or extended perpetuity periods, and flexible decanting and modification powers. States also borrowed concepts from the offshore world, such as trust protectors, purpose trusts and private trust companies. These tools can be combined to meet client goals without affecting the integrity of the trust. Specialist trust courts were created to support this development.

Many features now common in US trust law were introduced in Jersey decades earlier. Jersey offers a single, consistent legal framework, long-established trust law, and a globally respected judiciary. Its earlier adoption of modern trust concepts provides decades of case law and precedent. Jersey is also easier for international families to navigate than the US’s state-by-state patchwork and is widely viewed as neutral and internationally respected.

Jersey has its own legal system based on English common law principles. Its modern Trusts Law, introduced in 1984, predates most US statutes and has continually evolved to reflect global wealth dynamics. Jersey introduced perpetual trusts, directed powers, firewall provisions, private trust companies, non-charitable purpose trusts and self-settled spendthrift trusts long before US equivalents. The Royal Court of Jersey has deep expertise and efficient processes, and the Island has a highly skilled workforce in finance and private wealth services. These factors deliver stability and predictable outcomes for international families and advisers.

Jersey offers stability, predictability and neutrality, making it especially valuable for families with international assets. Its tax-neutral and internationally respected framework simplifies cross-border planning, while a strong legal infrastructure gives US advisers confidence when working with Jersey trustees. Jersey is also well suited to families seeking flexibility along with professional oversight through private trust companies.

Philip: Hello everyone and welcome to the Jersey Heard podcast. I’m Philip Pirecki, the America’s Lead for Jersey Finance and your host for today’s show. This is the second episode of our three-part series where we’re exploring how developments in the United States and global tax and regulation have shaped the trust and private wealth environment.

I’m joined again by Steve Sokić and Darrell King from Crestbridge, and we’ll be looking into these changes and what they mean for families, advisers, and for cross-border planning.

Darrell, I’ll start with you. Darrell, you’ve seen how US trust taxation has evolved both federally and at the state level. How did we get to where we are today and perhaps as importantly, what’s unique about the US approach?

Darrell: Let’s go back a little ways. Before 1996, there was actually no clear US rule on trust residency, but in 1996, a new act was passed and introduced what is known as the court test and the control test. Both those tests needed to be met in order for a trust to be considered domestic. So for example, if you have a foreign person that has a substantial power over that trust, that’s a substantial power is defined under the internal revenue code, for example, a power to remove and replace the trustee, then that trust becomes foreign for US tax purposes. The result, the rise of the US midshore trust industry, now competing globally for trust business with the other offshore centres. Now the tax treatment really depends on whether that trust is considered to be a domestic trust VS. a foreign trust, and whether it’s considered or classified as a grantor trust VS. a non-grant or trust, it’s pretty important to get those classifications right and to ensure that the proper reporting is done.

Otherwise, there are very heavy penalties for errors. Now from a state perspective, from the state level dimension, there is no state income tax in the, what we would call the premier trust states, Wyoming, South Dakota, and some of the others. That said, there’s a patchwork of rules. A trust can be taxed in several states or not taxed in other states.

There’s only 8 states actually that fully exempt non-grantor trusts.

Philip: So we can see in the US we’ve already got to this kind of internal jurisdictional marketplace, which I’ll often refer to more broadly as part of America’s dynamism, these different competing jurisdictions to see what works and what works better. Steve, how does that compare with what can be seen offshore?

Steve: It’s a good question because again, another parallel in many ways. Offshore is quite a sort of generic term and there’s a number of jurisdictions around the world over the last 25, 20 years that have at least attempted to compete in this space.

And the likes of course, Jersey, Guernsey, Isle of Man, Cayman, Singapore etc. There’s a number of them. If I were to go back 20 years, there were a lot more. And I think what’s happened is with the increased regulatory compliance and taxation rules, a number of jurisdictions I think have found it quite difficult to compete.
So I think the number of jurisdictions globally is less than it was a couple decades ago, and Jersey is amongst very few that has the attributes to suitably be considered tier one and similar to certain top US states around tax neutrality, transparency, regulation, predictability, reputation, things like that.

Now turning to local taxation, Darrell mentioned it in the United States, Jersey is relatively straightforward. It does have taxation. I lived there a long time and I certainly paid my tax, but in terms of trusts established in Jersey, it’s actually quite similar to some US states.

Basically, if there are no beneficiaries or settlors for that matter in Jersey, the trust does not attract taxation in Jersey. Again, arguably another parallel in that respect. But speaking of taxation, obviously most, if not all of our clients do not necessarily reside in Jersey, and a lot of those countries where they reside, be that where it may around the world.

When many countries around the world look at residency or tax residency of a trust, it’s different than what Darrell described in the United States. Quite often it’s based around ‘mind and management’ is a term used – where the central place of control of that trust and often it’s where the trustee is.

And that in turn has led to a real robust nature of governance around trustee administration of trusts. And also best practices that are expected, not only from clients of course, and their advisors, but also. From the regulator. And I think a lot of that has really come, resulted rather, in simplicity and certainty.

And that’s a real key appeal for cross-border families. So again, the evolution in Jersey is in, in some ways, again, similar to that in the United States. It just started, I would argue a lot earlier, but certain earlier and has had time to evolve and gain that international reputation. And again I come back to what I said at, I think at the end of the first episode, which was, for US advisers advising their US clients or US-connection clients, Jersey not only has its all those positive attributes that I mentioned before, but it also has experience dealing with US-connected families as well.

Philip: Steve, if I can here, I think the takeaway from this is that for US advisers that Jersey offers really a complimentary option, particularly for internationally connected families needing cross-border structures. And I’d like to just step back just for a moment to the point you’ve raised about tax.

Tax has changed globally quite dramatically, frankly, in the last 20 years. How has that affected how trusts are used?

Steve: Tax rules around the world in many countries, including but not limited to the United States, have essentially been tightened over the years. The rules themselves, but also the introduction of new enforcement mechanisms by governments around the world to ensure that the right amount of tax according to the law, is indeed paid by the taxpayers in those countries. And as I mentioned earlier, and as Darrell mentioned, it’s one thing to look at the trusts tax residents, either in the United States or in Jersey, but there’s other tax considerations. There’s the creator of the trust, the settlor or grantor, there’s the beneficiaries.

That’s one of the good things and the reasons why planners like a tax neutral place, is because you can put a trust in a place where it’s tax neutral and then plan around the other parties to the trust, like the settlor and the beneficiaries, and ensure its tax-compliant. Now, speaking of tax compliance.

It’s never, ever been more important today to be tax compliant. And I think the story in that respect has evolved particularly over the last 25 years. It arguably started in the early 2000s with a wave of tax information exchange agreements, and that lasted a number of years as one way of affecting enforcement of the right amount of tax being collected.

Then came other measures. So for example, in 2010, the US introduced FATCA unilaterally, of course, where they required international institutions and countries to report back to the US on US taxpayers accounts and other vehicles in those countries. And then that was followed around six years later in 2016 with the introduction of the common reporting standard or CRS.

That also transformed global transparency in the exchange of tax information. And that really, those events really pushed and forced the need for proper tax compliant planning and structuring. But it didn’t really stop there. There were other measures being pushed or adopted or debated about since then.

So there’s also been, for example, some countries introducing blacklists or grey lists, discouraging the use of some jurisdictions around the world or even having punitive measures of people from those countries use those jurisdictions. That’s broadly faded away. But more recently there’s been quite a debate around public beneficial ownership registers.

And whether there is a need for those around the world and in both the, somewhat in the United States, but also around the world. Now, Jersey, just on that note has had a centralised non-public register since 2017. So it’s nothing new to us in Jersey, balancing transparency with privacy and trusts also have a register with each of the trustees in Jersey. It’s a regulatory requirement with appropriate checks and balances in place for lawful access to those non-public registers, where appropriate, but not public. And I think that’s an important point as well. And I think going back pre 25 years ago, in the absence of a lot of these measures that I just mentioned, the world has really moved on from secrecy many years ago to much more, certainly tax compliant planning, but really substance of what is established and governance around that. And governance, I would add is a particular importance, and I would say the wealthy around the world have borrowed in many ways from institutional governance in the overall stewardship and ownership of their wealth.

Philip: Darrell, is there anything that you would like to add to what Steve said?

Darrell: Yeah, just thinking about some of the comments that Steve has made and the way things have evolved over the past couple of decades. Fundamentally, much of the planning today for wealthy families is not driven by tax planning per se.

It’s driven by efficiency. Those families are seeking efficiency overall to utilise a structure and a jurisdiction that can optimise the family’s asset preservation, estate planning and tax plan. Back to what Steve said earlier, simplicity, certainty, effectiveness, really lead the charge on this.

Philip: It’s a very interesting evolution, the real value coming out of the robust regulatory and governance environments and you mentioned seeking efficiency, perhaps maybe I would add seeking expertise, and no longer driven by tax. Of course, speaking of the regulatory environment, Darrell, if I could, how have US rules evolved and how do they compare with the offshore standards I just referenced?

Darrell: They have evolved, as they have offshore they have evolved onshore here in the US, going back to 1970 when the foundation of the anti-money laundering framework was established under the Bank Secrecy Act, followed by the Patriot Act, which expanded the anti-terror and anti-money laundering enforcement, that was in 2001, followed by, as we all know, the FATCA legislation that came into being in 2010, the Anti-Money Laundering Act that came in 2020 to overhaul the previous AML framework, the Corporate Transparency Act, which was a bit of a stutter step, aimed at the beneficial ownership reporting, but later considerably relaxed – although I note that New York State has reintroduced their own version of the Corporate Transparency Act and beneficial ownership reporting. Now, in terms of the trend, of course there’s been increased oversight, but here in the US it is still lighter than the offshore trust regulation that we’ve seen in those non-US jurisdictions. And there is some debate on whether the rollback in beneficial ownership reporting affects US credibility globally. That’s arguable perhaps, but that’s a point that has risen on a couple of occasions.

Philip: I suppose when you’re the United States, you get to say do as I say, not as I do. Steve, offshore centres like Jersey obviously have been under the microscope for years, and I suppose when you are on the spotlight like that, how has that shaped their approach?

Steve: Sure. This is part of the difference between the US trust states, if I can call them that, and places like Jersey around the world. There are, although we share some elements of our evolution, what has differed as inferred in your question is the different pressures or triggers over that time.

And if I look back to the 80s, Jersey first introduced AML statutes as early as 1988, and then anti-terrorism legislation in 1990. And then what happened was the FATF came in. And had some concerns, not about Jersey as such, but around getting the global international financial centres to a certain AML standard – if I could put it that way – and they introduced back in early mid-90s, a set of 40 global standards. And then Jersey in 1999 introduced its Proceeds of Crime legislation aligned with those 40 FATF global standards. And then time went on, obviously, for these new laws to be embedded to be adopted into other trust companies like ours, but also other finance companies in Jersey and 25 years or so have passed since then.

And there’s been a number of inspections and reviews. By the FATF or its subsidiary entities. There have been many inspections and reviews of Jersey’s AML framework and performance in this space for that matter. And that included most recently in 2024 when Money Val, a subset of the FATF, came in and did a quite a thorough and deep review of Jersey’s performance and enforcement of its AML Rules and Money Val concluded and rather rated Jersey compliant or largely compliant in 39 of those 40 FATF areas. A result that Jersey is not only very proud of, I would say, but also reflects yet another area of value and comfort that it brings to families around the world in the structuring of their wealth.

Darrell: Those are important points and from a US perspective, I would say that kind of reliability, that kind of attention to appropriate regulation, that kind of, rigorous management of their own regulatory environment really gives professionals confidence when looking to utilise a non-US trust jurisdiction. Professionalism, reliability, expert resources and a great reputation: that’s important to US professionals. It’s even more important to those wealthy US families that are looking to hold a portion of their assets outside the US.

Philip: Steve and Darrell, thank you for another fantastic conversation. We’ve seen that transparency and substance are now table stakes everywhere, and that the conversation has completely moved on.

Now if any of this resonates with you and you’d like to explore how Jersey can complement your US planning, please visit us at jerseyfinance.com. We’ll be back next time with the final episode of this three-part series on professional trustees and modern cross-border structures. Thank you for listening. Goodbye.

US trust taxation became more clearly defined in 1996 with the introduction of the court test and the control test. These tests determine whether a trust is classified as domestic or foreign and both must be satisfied for a trust to be considered domestic. For example, if a foreign person holds substantial powers over a trust, such as the ability to remove or replace a trustee, the trust will generally be classified as foreign.

This tightening of the US trust tax regime contributed to the rise of the US midshore trust industry, which now competes globally with other financial centres. A trust’s tax treatment depends not only on whether it is domestic or foreign, but also on whether it is a grantor or non-grantor trust. Getting this classification right is critical, as mistakes can result in significant penalties.

At the state level, several leading trust jurisdictions, including Wyoming and South Dakota, do not impose state income tax, which has further enhanced their appeal.

Establishing a trust in Jersey is comparable to doing so in certain US states. Where there are no Jersey-resident settlors or beneficiaries, the trust is not subject to Jersey taxation. This structure is common for US clients, who typically do not live in Jersey.

In many offshore jurisdictions, tax residency is determined by the concept of ‘mind and management’, meaning the place where the trust is centrally controlled, often where the trustee is located. This approach has led to a strong governance culture around trustee administration. High standards of best practice are expected not only by clients and advisers but also by regulators. The result is simplicity and certainty, which are key attractions for cross-border families.

Jersey’s evolution has followed a similar path to that of the US but it occurred earlier and has had time to mature. As a result, Jersey has developed a strong international reputation and deep experience in supporting US-connected families.

Ultimately, Jersey offers a complementary option, particularly for internationally connected families requiring well-governed cross-border structures.

Over the past two decades, tax rules have tightened significantly. This includes not only substantive changes to the rules themselves but also the introduction of new enforcement mechanisms designed to ensure taxpayers pay the correct amount of tax in their home jurisdictions.

Tax considerations extend across all parties involved in a trust structure: the settlor or grantor, the trust itself and the beneficiaries. This is why planners often favour tax-neutral jurisdictions. By locating the trust in a neutral jurisdiction, advisers can focus on ensuring tax compliance for the other parties involved.

Tax compliance has never been more important and global transparency has increased dramatically through the automatic exchange of information. In parallel, blacklists and grey lists have been used to discourage the use of certain jurisdictions. While their influence has diminished, debate continues around public beneficial ownership registers. Balancing transparency with privacy is not a new concept in Jersey which has maintained a centralised, non-public register since 2017.

For many wealthy families, modern planning is no longer primarily tax driven. Instead, the focus has shifted to efficiency. Families are seeking structures and jurisdictions that optimise asset protection, estate planning and tax outcomes as part of a cohesive whole.

Simplicity, certainty and effectiveness are now the key drivers. Families want solutions that work smoothly across generations and jurisdictions rather than complex structures driven solely by tax considerations.

Philip: Hello everyone and welcome to the Jersey Heard Podcast. I’m Philip Pirecki, the Americas Lead for Jersey Finance, and your host for today’s show. This is the third and final episode of our three part series where I’m joined by Steve Sokić and Darrell King from Crestbridge. This time we’re discussing the evolving role of professional trustees, the structure of cross-border trusts, and how US and offshore approaches are coming together to meet the needs of modern families.

I’m going to start with Darrell. Darrell, when we talk about professional trustees in the US today, how has that landscape changed over, say, the last decade?

Darrell: It’s changed quite a bit, Philip. Historically, the trust industry in the United States has been dominated by banks particularly in Delaware, non-professional or family trustees have been more common in the past, but we’re seeing that decline fairly quickly these days due to increased complexity of the trust assets held in trust, an awareness of the risk that an individual trustee is exposed to, the size of the states that they’re administering and aging out. And so when we’re seeing an emergence of independent US trust companies privately owned starting to come forward. We’re also seeing and have seen over the past 20 years, the entry of foreign trustees who have established US trust operations. Great example would actually be our former firm, RBC, that acquired a domestic trust company and morphed it into a fully functioning cross-border provider, and that was back in 2004. So it started quite a while ago. Has slowly evolved over the last 20 years and now we’re seeing the pace picking up.

What else can I tell you? We talked about the growth in modern trust law, the seven states that have enacted that modern trust law that’s providing more competition, more choice, and evolving expertise.

Philip: That’s a really helpful picture, especially the point about independent trust companies and offshore players shaping US market. I think a lot of advisers listening will recognise that evolution in their own practices, so thank you, Darrell. Steve, if I could flip across the Atlantic to offshore jurisdictions specifically like Jersey, they obviously have a different history with trust administration. How has the professional trustee world evolved there, particularly in the last say 10-15 years?

Steve: Sure. First of all, I do agree with Darrell’s comments around not the shifting, but rather integrating or sharing of trusteeship DNA between Jersey and the United States in good part because of Jersey trust companies entering into the US. It’s not just our own, but it’s a number of others as well.

So I think that DNA sharing will only continue but coming back to Jersey, the trust industry in Jersey started in the 60s with the banks, the UK banks, coming and setting up not only their banks of course, but also their trust companies and that was followed shortly thereafter by law firms.

And that was the case for a little while but fast forward and not unlike other international financial centres, the dominance by banks and to a lesser extent, law firms, has diminished significantly. And that’s due to a number of reasons, which probably another podcast could cover. But there was a lot of de-risking of their trust businesses as part of broader de-risking.

Some still do exist, I should say, but the number is certainly much less. And that was in response to a number of global related fines and penalties that caused those banks to retrench in part. Now there’s also been the entry of private equity and the ownership of trust companies, not just in Jersey but in a number of international financial centres.

And that’s changed the mix a little bit. Certainly in places like Jersey and elsewhere, it’s introduced a much more significant ‘sister sector’ in the institutional fund administration, for example, that’s been growing quite fast over the number of years. So the diversification, if I could put it that way, of trust companies – or not all – but a number of trust companies has occurred as well.

Law firms are still there, but again, as I mentioned, not as much as, going back a number of years, and independent trustees still exist, offering obviously that independent ownership arguably has a knock on effect into the independence of its, of the business itself. I think the point here is there’s a number of different types of trustees, be they bank-owned, privately owned, PE-owned, that offer different areas of value for clients depending on their circumstances. And that’s where of course, their advisers help navigate through and find the one that’s most appropriate for the family.

Philip: Thank you, Steve. First of all, that’s very interesting. It’s striking actually how much convergence we’re seeing now between the US and, to your description, the top tier offshore centres that old sort of onshore VS. offshore trustee stereotype doesn’t seem to hold anymore, and the focus everywhere is the expertise and genuine sort of client alignment.

Darrell: I think it’s worth making this point too, we’re in the midst of this whole generational wealth transfer, the largest ever, and so wealthy families are really interested and concerned about finding a trustee that can be the right fit for them, that can provide continuity, reliability, the needed expertise, because remember, the structure that they establish is not for a year or two, or for 10, it’s for 20 or 50 or a hundred years so that’s really important.

Philip: That’s a really good point, Darrell. And actually let’s bring this sort of all together because this is what advisers are wrestling with every day. You’ve both painted a picture of what the world looks like so what do typical cross-border trust structures actually look like today and what trends should us advisers really have on their radar and Darrell, can we start with the United States? What are you seeing from US families and from international families with us connections?

Darrell: Sure. Thanks, Philip. We are seeing an increasing international flow outbound from the US. These are US families looking to move a portion of their wealth to a secure jurisdiction and invest that wealth in non-US dollar assets.

This is just part of a “just in case” plan. Interestingly, non-US families have been doing this for decades, typically because they live in countries that perhaps are not as settled, and the rule of law doesn’t apply as well as it has in the US. But these days, US families are starting to take up that thinking and are looking to establish that, as I called it, “just in case” plan. It’s a risk management play, protect the family wealth for the long term, and actually Jersey is well suited to support this.

Now looking inbound international families looking for an alternative to traditional offshore centres are increasingly looking to the US, Wyoming and a handful of other states are worth considering. Having said all of that, there is a continuing trend of foreign families moving to the US or with US members or with US assets, and I don’t see that slowing down. The states that we’ve discussed in this podcast series, Wyoming and a handful of others, are well suited to support that planning.

Philip: Steve, can you pick that up but from the Jersey perspective, or maybe more broadly offshore perspective? How do those structures typically look when Jersey’s involved, and what are the practical advantages advisers should know about?

Steve: Sure. So in the same order that Darrell mentioned, if I look at the outbound side for a moment, so Americans setting up a trust in Jersey as part of a broader state and risk mitigation plan, including asset diversification, asset situs diversification as well. Assuming those assets are sitused either in Jersey or somewhere else outside the United States.

I think if a couple things here. First of all, I think tax compliance is very important. These trusts tend to be tax transparent to the settlor or the grantor, to use the US term, which is fine, but there’s also important US tax compliance that goes along with this, including annual filings that need to be prepared and signed by the trustee and filed with the IRS.

And there may also be reporting and quite often is. With respect to distributions, for example, to US beneficiaries. So the tax compliance and making sure that one has a good understanding of what that is, along with good US accountants, of course, to prepare those filings for the trustee. But that, that US awareness of the existence of that compliance on the trustee side, I think is quite important.

On the inbound side, so international families looking to places like Jersey, normally that starts with an overall estate plan, ok? They have other wealth succession and preservation objectives. For example, to pass the wealth on for generations. But having a US beneficiary often comes up in practice as secondary to those other broader objectives, but nonetheless important to ensure, in a similar vein to I talked about earlier, to make sure that is tax compliant to well and efficient as well.

Not just compliant but efficient for that US beneficiaries. So quite often what we see, and this is just an example, is we’ll see a trust. In Jersey for a family based in say the Middle East or wherever in the world with a US taxpayer beneficiary. And that person could be resident in the United States or be a US citizen.

Either way, they’re US taxpayers. And so what often you’ll see is that the main trust in Jersey, along with a – for lack of better term – “sub trust” in the United States in one of the states that, that that Darrell mentioned earlier, and that US trust quite often is a beneficiary of the foreign trust and the reason we see this often as part of that tax efficiency and tax compliant planning to make sure that US beneficiary isn’t inadvertently harmed by other objectives of the family unrelated to US taxation.

So that’s just one example. There’s a number, but I think that one that one is probably the most common.

Philip: Thank you, Steve. That was very helpful. It seems very clear to me that based on what I’ve heard here, US families can comfortably use Jersey for a portion of their wealth. International families can use top US trust estate or states, and in many cases we’re building genuine hybrid solutions here that pull the best from both worlds. Advisers don’t have to choose a side, they can use both to serve their clients optimally. That’s the message I’ve taken away from this last bit. Darrell, Steve, thank you both so much for three really insightful episodes.

I’ve learned a huge amount, and I hope our listeners have as well for everyone who’s tuned in. If you’d like to explore how Jersey’s private wealth proposition can work alongside your US planning, please head over to jerseyfinance.com. My details are right there and I’d love to hear from you, and that wraps up our three part series.

Thank you for listening to the Jersey Heard Podcast, and until next time, bye.

The US trust landscape has moved away from family trustees and traditional bank dominance towards independent, professionally-run trust companies. This shift reflects growing asset complexity, increased risk awareness for individuals and the need for long-term continuity as families plan across generations. For Jersey, this evolution has enabled closer alignment between US and Jersey trustees, creating shared standards, compatible structures and smoother cross-border collaboration for US private wealth.

With the largest intergenerational wealth transfer underway, families are focussed on trustees who can deliver continuity, reliability and expertise over decades rather than years. Jersey’s well-established private wealth sector, political stability and experienced professional trustees position it as a credible jurisdiction for US families seeking long-term stewardship beyond domestic solutions alone.

US families are increasingly establishing structures outside the US as part of a broader risk management and asset diversification strategy, including exposure to non-US dollar assets. Jersey’s stability, robust regulation and experienced trustees who understand US tax transparency and reporting obligations make the jurisdiction an ideal choice. Jersey can support US families to implement ‘just in case’ plans without compromising compliance.

For international families with US connections, Jersey trusts are often part of a wider estate plan focussed on succession and wealth preservation. Where US beneficiaries are involved, structures are commonly designed to remain both tax compliant and efficient, sometimes using US sub-trusts alongside a main Jersey trust. These hybrid solutions allow advisers to combine the strengths of Jersey and selected US states, ensuring US beneficiaries are protected while maintaining the family’s broader objectives.