Jersey has a modern and progressive Trust Law, The Trusts (Jersey) Law 1984, which provides a very suitable and convenient base for a large number of international and personal trusts.
A Trust is a legally binding arrangement whereby one or more persons – the trustees – hold the legal title to certain assets for the benefit of other persons, the trust beneficiaries.
In Jersey, trusts are most commonly established in writing by an instrument executed by both the person giving the trust assets, the settlor, and by the trustees. A trust may also be formed by a declaration of trust, in which the name of the settlor does not appear.
Legal title to the assets subject to a trust passes from the settlor to the trustee or trustees who then hold and administer the assets in accordance with the trust instrument, subject to the requirements of the law. It is common practice for a settlor of a trust to provide the trustees with a letter of wishes which, though not generally legally binding, gives the trustees guidance as to how the settlor wishes them to exercise their powers and discretions.
Trusts established for non-residents are frequently discretionary, allowing considerable scope in the nomination of beneficiaries and the appointment of the trust fund between beneficiaries. The settlor may wish, however, to give fixed rights as to the income or capital to certain beneficiaries. These points need to be discussed and agreed with the proposed trustee before the trust instrument is drawn-up. On occasions, the settlor of a discretionary trust will appoint a protector of the trust assets. In such cases, the trustees may not exercise certain powers and discretions granted to them by the trust instrument without the prior consent of the protector.
Trusts can be used for a variety of reasons. A Jersey trust is a useful vehicle in which to hold substantial family wealth in a politically stable jurisdiction. In certain circumstances a Jersey trust can be used to defer or avoid both income and capital taxes. Jersey trusts are also used for estate planning and, as the trust can continue beyond the settlor’s death, can ensure continuity in ownership and management of a family’s property.
Although often used to protect assets, trusts may have much wider and far reaching benefits, some of these principal uses are:
- Asset protection trusts
- Preservation of family property and protection against political risk
- Tax planning
- Avoidance of inheritance laws or probate formalities
- Employee benefit trusts and employee share option schemes
- Charitable trusts
- Purpose trusts
- Trading trusts
- Unit trusts
- Avoidance of exchange controls
- Ownership of special purpose vehicles
Anyone resident outside Jersey intending to establish a Jersey trust should first take advice from a legal adviser who is competent to advise upon the laws – tax, exchange control or other laws – of any other relevant jurisdiction. Voisin and Volaw are only able to advise upon the application of Jersey laws to a proposed trust.
Trusts established in Jersey are subject to the provisions of the Trusts (Jersey) Law 1984 which imposes certain duties on trustees, provides for certain rights of beneficiaries and generally regulates the operation and administration of Jersey trusts.