While there have been several amendments made since its inception, this modern and comprehensive statute has stood the test of time, allowing for strong case law to be reported over the decades from the Jersey judicial system. This has provided a wealth of jurisprudence, enabling the evolution of Jersey into a preferred jurisdiction of choice for trusts.
This, along with political stability and tax neutrality, is why Jersey continues to be the jurisdiction of choice for the world’s ultra-high net worth clients and their families for their wealth planning needs and holding assets outside their own jurisdiction, as a way of protecting their family wealth.
The first amendment made to the trust law was in 1989, regarding the transfer of property to a trust. The amendment stated that nothing in the terms of a trust shall cause a transfer or disposition of property to a trust to be invalidated by application of the rule “donner et retenir ne vaut”. It also amended dealings by a trustee with other parties and the position of the outgoing trustee.
The next material change to the trust law was in 1996, allowing for non-charitable ‘purpose trusts’, whereby the trust fund can be held for specific purposes. An enforcer – separate from the trustee – is required, to ensure that the trust’s purposes are met. The Jersey purpose trust can be used in different ways, such as holding shares in a private trust company, meeting a settlor’s philanthropic or political cause and/or holding shares in an orphan special purpose vehicle as part of securitisation and finance transactions. The only exception is that it cannot be used to hold Jersey immovable property.
Where a purpose trust is used for philanthropic or charitable purposes to benefit the public or raise funds from the public, consideration must also be given to the requirements of the Non-Profit Organisations (Jersey) Law 2008. If determined that the trustee of the purpose trust is indeed a Non-Profit Organisation, registration is required to be made with the Jersey Financial Services Commission (JFSC).
Last year, the purpose trust was used to create Jersey’s first ‘data trust’, which held data gathered from sensors on Jersey cyclists as to their cycling routes, which in turn can be used for data analysis, data stewardship and commercial purposes.
The next amendment was made in 2006, which relates to the duration of trusts, so as to allow them to exist for an unlimited time. This is an important feature where ‘dynastic family trusts’ for multiple generations are required. The amendment introduced a requirement that a Jersey proper law trust could only be validated by Jersey Law (to protect against interference from foreign courts) and brought clarity around settlor reserved powers.
In 2013, the sixth amendment incorporated new articles in relation to mistake and the rule set out in Hastings-Bass, which gives the Court discretion to set aside an exercise of power if the trustee has failed to either take into account relevant considerations or has taken into account considerations, that it should have disregarded.
The seventh amendment followed in 2018, updating the trust law to include additional clarity in respect of securities, reserved powers and disclosure.
Six years on, some new proposed amendments are currently being consulted on. These relate to priority claims by former trustees and secured lenders, following the Re Z case and the ability of beneficiaries to call for the termination or variation of a trust following the Rusnano case.
Trusts are just one wealth planning solution within the fiduciary services offered to private clients, charitable endeavours and companies. However, they remain a flexible option for meeting clients’ fixed objectives for succession planning, vulnerable and minor beneficiaries, wealth protection from potential creditors and the division of wealth for different arms of the family.
With many of the next generation wanting their family trusts to incorporate impact investing alongside capital growth, Jersey trustees and their administration teams have been upskilling themselves in sustainable finance in order to have meaningful conversations while meeting their fiduciary duties. Another fast-developing area is the permeation of digital and artificial intelligence technology solutions into all areas of wealth, financial, regulatory, assets and administration. It is another area in which many trust professionals are upskilling.
The industry is proud to have many experienced, qualified trust practitioners, holding various relevant professional qualifications, working hard to ensure that a strong successor generation is involved in continuing the delivery of high service levels that meet regulatory obligations with strong substance and governance. Many visit the families in the jurisdictions in which they reside, in order to get a real understanding of the challenges and opportunities they face.
Having looked at purpose trusts, data trusts and dynastic family trusts earlier in this article, companies are also able to make use of discretionary trusts. These can be used as part of an employee incentive arrangement, to provide an employee benefit trust. The employees (or a select group of employees) of the company/group are named as beneficiaries. The types of benefit that an employee may receive can include granting of share options, making cash payments and/or share awards.
Many trust companies have a specialist team dedicated to being trustee and administering employee benefit trusts, working closely with companies or multinationals as to their recommendations in determining when share and cash awards are delivered and leavers’ share buybacks. Employee benefit trusts can also be used when companies are restructuring with either a listing or an exit in mind.
All professional trust companies in Jersey are regulated by the Jersey Financial Services Commission (JFSC), ensuring that they comply with various legislation, prudence, conduct and governance. Many are members of Jersey Association of Trust Companies (JATCo), the voice and trade body of the private wealth industry. JATCo works closely with the Government of Jersey, JFSC, Revenue Jersey, Jersey Finance and the Jersey branch of Society of Trust and Estate Practitioners (STEP) to ensure that the Island remains a leading international finance centre for private client wealth.
It was striking how collaborative each of these parties were over the last year, preparing for the MONEYVAL assessment and hosting the assessment team while they undertook their review of Jersey. Together, they ensured that we are operating at the highest standards in order to prevent money laundering, financing of terrorism and proliferation financing.
This year, JATCo was delighted to establish its next generation sub-committee JATCo 2.0 to give mid to senior management level exposure to board meetings, horizon scanning, strategic thinking and networking. JATCo also has a technical sub-committee which considers and responds to various consultations and attends working groups to help develop new and review existing legislation.
Mention should be made of JATCo’s representation on the Trust Law Working Group which looks at legislation and considers the practical implications for trustees and trust companies, following current case law to ensure it remains up-to-date and robust for the future.
All of which should give comfort to the families, companies and their advisers in their decision to use Jersey as their leading jurisdiction of choice for their trusts.
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