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Jersey aims to boost appeal with enhancements to Trusts Law

Jersey’s Privy Council yesterday (17 October 2012) approved significant enhancements to the island’s trusts laws in a bid to make it a more attractive location for private wealth management business.

18 October 2012

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The changes are designed to bring clarity and certainty in a number of key areas as the wealth management industry shifts away from simple trust structures towards higher value and more complex vehicles. The amendments are contained in the Trusts (Amendment No 5) (Jersey) Law, adopted by Jersey’s government in November last year.

The key measures include:

• Introduction of a definition of purpose: this change introduces for the first time a definition of purpose which includes the acquisition, holding, management or disposal of property. Accordingly, it will be possible to establish ‘ownership only’ purpose trusts.

• Limitations of actions or prescription: a significant amendment that limits a trustee’s liability (subject to fraud or recovery of trust property claims), which previously was almost indefinite. It will mean that action against trustees will only be possible up to 21 years after the alleged breach of trust. The limitation does not apply to foreign trusts whose proper law is the law of a jurisdiction to which the Hague Convention extends.

• Definition of a protector: this amendment introduces a definition of the ‘protector’ as a person, other than a trustee, enforcer or beneficiary, who holds a power, discretion or right in connection with a trust.

• Protection from foreign interference: the amendment is designed further to strengthen Jersey’s trust vehicles from attack by foreign courts.

• Remuneration of professional trustees: this will permit professional trustees to be paid reasonable fees even when the trust deed is silent on the matter, but only in respect of services provided after the amending Law comes into force. Previously, trustees were only remunerated for their services if authorised by the terms of the trust or by Order of the Royal Court.

• Position of outgoing trustees: this amendment relates to the transition when there is a change in trustee, giving the outgoing trustee the right to enforce a term of a contract providing reasonable protection against liabilities, i.e. indemnities, even though not a party to the contract.

• Trustees transacting with themselves on behalf of different trusts: this amendment provides clarity in expressly permitting trustees to contract with themselves in respect of two or more trusts for which they are trustee.

Geoff Cook, chief executive at Jersey Finance, said: “While specific in nature, the feeling among private wealth industry professionals in Jersey is that the changes contained in Amendment No 5 will make Jersey a significantly more attractive destination overall for private client business.

“The international private wealth management industry is constantly evolving, and clarity and certainty are absolutely vital, so it is important that we continue to evolve our trust framework and ensure that our legislation is as robust as possible.

“Jersey is a world leader in the trust industry, ranked tenth and higher than any other offshore centre in the Global Financial Centres Index for private banking and wealth management. Its original trust legislation has been widely copied by other jurisdictions since it was introduced in 1984 and these latest amendments will build on that reputation to ensure that Jersey maintains its status as one of the most highly respected trust jurisdictions globally.”

The law is expected to be registered in Jersey’s Royal Court on or before 2 November and come into force seven days later.

Categorised in:

Tax & Wealth structuring Wills, Trusts & Probate