To avoid forced heirship rules
Some countries have forced heirship rules which means the law decides who inherits the trust’s assets. If a settlor from a country with forced heirship rules sets up a trust in Jersey, the settlor can decide who inherits the trust’s assets. They can also decide who should take over as settlor if they leave.
To protect assets
Jersey’s economy and political environment are stable. Because of our clear statutory framework and supporting case law, Jersey is seen as a safe place. It is also a place where assets may continue to grow, free of foreign law interference. This is attractive to non-Jersey settlors who live in countries which may not offer the same stability, security or investment opportunities.
Privacy and confidentiality
Under Jersey law, we do not have a register for trusts and there is no requirement to make it public when a trust is set up in Jersey. Because of this, a beneficiary may not be aware they are a beneficiary. If they are a minor, under 18 years of age, this is particularly helpful because it protects them and allows them to carve out their own path before receiving any money from the trust or come of age.
If none of the beneficiaries of a Jersey trust live in Jersey, then the trust does not have to pay tax on its foreign income. It will only need to pay tax on any Jersey income (except interest received on a Jersey deposit bank account). So, the trust fund can grow without weighty tax obligations.
If a trustee does not live in Jersey, the trust fund may be subject to tax in that jurisdiction. So, it may be better to have a Jersey-based trustee, not only for tax purposes but also because they will be familiar with Jersey law. If a settlor does not have English as a first language, it could also be best to use a Jersey-based trustee because the language of the trust will be in English.
If a beneficiary does not live in Jersey and receives a distribution, they may be liable to tax in their own jurisdiction. If a beneficiary moves to Jersey however, the trust's entire income may become subject to tax.