Guernsey: Multiple Choice: Choosing The Right Guernsey Fiduciary Structure

Last Updated: 19 December 2014
Article by Matt Litten

With Guernsey's new Foundations law coming into effect back in January 2013, Guernsey now has the full 'toolkit' of fiduciary structures for wealth planning needs. In this briefing, Heath Martorella looks at the key issues for international clients and their advisors to consider when choosing the right Guernsey structure.


As recently as six years ago, a discretionary trust was the principal Guernsey fiduciary structure offered to international clients. Now, a far wider choice of structures is available following the advent of the Trusts (Guernsey) Law 2007, which allows the creation of non-charitable Purpose Trusts, Reserved Powers Trusts and Private Trust Companies, now accompanied by the new Foundations Law which came into effect in January 2013. But what are the key factors that clients and advisors should consider before making their choice of structure?


For many, a discretionary trust will remain the 'strongest' form of structure. This is due to the complete separation of assets out of the control of the settlor, into the hands of the professional trustee as the new legal owner. The aim is to place the assets beyond the reach of unwarranted hostile parties. For maximum effectiveness, the settlor should not retain any trust powers or act in any official capacity such as a co-trustee or protector. This would extend to any persons who might be affiliated with the settlor, or the same jurisdiction as the settlor. These are also considerations for Private Trust Company ('PTC') structuring - i.e. who will be the Directors? Who will own the PTC?

Other suggested actions would be to ensure that the trust document does not permit the proper law and forum of administration of the trust to be changed to a jurisdiction affiliated with the settlor or any of the beneficiaries. The trust structure should ideally not have any actual or potential footprint in any jurisdiction where a claim might be brought, recognised or enforced - or where an injunction might be ordered. These considerations also extend to the situs of any assets the trust might own. The confidentiality benefits of trusts should not be underestimated, as these form an equally important pillar of asset protection (see "Confidentiality" below). With foundations, the above points are still valid and need to be considered by the founder, councillors and any guardian. Around confidentiality, whilst Guernsey Foundations are publically registered and must disclose limited information, the fact they are registered entities may be helpful in defeating any unwarranted claims of a "sham" arrangement, which can be a line of attack against trusts. Also, the councillors will owe their duties to the foundation itself (like a company) - and not to the beneficiaries (as with trusts).

Confidentiality of information and asset protection can also be brought into play where a founder might stipulate that a beneficiary of a foundation must enter into a pre-nuptial agreement before marriage, in order to remain an enfranchised beneficiary with rights to information about the foundation (see "Confidentiality" below). Please also see an excellent briefing in this field from our associated law firm, Collas Crill by clicking here: Asset Protection in the Channel Islands


For many clients, maintaining the confidentiality of their affairs is still a key consideration. We are speaking only of legitimate confidentiality needs here - for example high-profile families, or those who wish to avoid inter-family disputes over their wealth in the future.

In these scenarios, a discretionary trust will afford the highest degree of confidentiality, as there is no registration of trusts. (As a sidenote - in the current political climate it is important to stress that Guernsey trust service providers are regulated by the Guernsey Financial Services Commission, giving the regulator the ability - if ever necessary - to make enquiries and receive information where it has legitimate concerns about any trust, in strict confidence. This is in contrast to the unregulated position in some onshore countries.)

Where clients wish to mitigate the possibility of future disputes between beneficiaries, then there may be merit in considering a Foundation, albeit that very limited details are disclosed publically (see below). With a trust, beneficiaries have an 'equitable interest' in the trust assets and thus rights to information about the trust. The trustee can therefore face a difficult task to resist disclosure where it is concerned that information will be used by a beneficiary to initiate unwarranted and hostile actions. Guernsey Foundations law helpfully allows for the creation of two classes of beneficiaries; enfranchised - with rights to information and disenfranchised - with no rights to information about the Foundation's affairs. The Foundations law envisages promotion/demotion of beneficiaries between these categories. The will however be represented by a Guardian (akin to a protector) to provide oversight and reassurance. So if this is a possible solution, what information about the Foundation will be disclosed publically, since it is a registered entity? This information is limited to the name and registered number of the Foundation, its registered office address and the names and addresses of the councillors and any guardian. It should be an achievable scenario to ensure that a professional Guernsey fiduciary and non-related parties to the settlor are appointed as councillors to the Foundation - and to avoid the founder and his/her other family members fulfilling any roles. The Guernsey fiduciary could act as the sole councillor. Should the Founder wish to retain some ultimate control over the Foundation, where s/he does not act as a councillor, the Founder can still reserve key powers during their lifetime e.g. to remove and replace councillors, to wind up the foundation.


"Wealth never survives three generations" - Chinese proverb

An objective of many structures is to ensure the preservation and smooth transition of wealth to future generations. Research from Oxford Place in 2012 suggests that only 9% of wealth actually passes beyond three generations. By 'wealth', this might also include a significant family business, as well as cash, property, investments etc. A discretionary trust structure will again come into contention here - particularly where the client is aiming to hold wealth or a business together to avoid potential family conflicts, or the possibility that younger family members may not possess adequate skills and expertise. A trust will provide stability of ownership of the wealth or business. However, when dealing with a family business, the trustee (acting both as a shareholder of the company and as a trustee with obligations towards the beneficiaries) will play a very important role in balancing the interests of the company versus the beneficiaries' interests. Disagreements between beneficiaries might also arise e.g. as to how the business should be run, strategy around dividends. At the outset, the trustee will not be knowledgeable about the affairs of the family company, and will either need to acquire this knowledge over time, or possibly seek advice - perhaps via some form of family advisory committee, or an external adviser. Private Trust Companies and Foundations can offer a useful tool, where there is less risk of family disagreements, and the client is keen to involve family members. The Board of Directors of a PTC can include family members, or even go as far as mirroring the Board of a family enterprise. The same is true of Foundations, with the composition of the Council members.

One issue to consider is the possible separation of the "stewardship" of assets from their "control". Practically, this could be achieved in different ways; as an example, the PTC or a Foundation might have executive committees or advisory committees with different remits. The "stewardship" committee could include the patriarch and younger family members with a remit to oversee/ manage the wealth or family business. The "control" committee might include the professional fiduciary company, possibly joined by the patriarch or matriarch as settlor/ founder; only this committee will have the power to consider and authorise distributions to beneficiaries.

As noted above, Foundations include the ability to nominate which beneficiaries are enfranchised or disenfranchised. This may be useful depending on whether or not certain beneficiaries wish to become involved with the Foundation's management, or where the founder is concerned at possible disputes arising in the future. Changes can be made to promote / demote beneficiaries in the future, as circumstances change.


The types of asset to be held will be an important consideration in choosing the right structure. This is also a key issue for fiduciaries, who might be comfortable administering a trust structure holding a balanced portfolio of stocks and shares, but not structures containing undiversified higher-risk assets - such as art or large shareholdings in private companies. For higher-risk assets, the concern is that the trustee could be held liable for failure to act prudently and diversify the assets in accordance with trust law.

The holding of higher risk / less diversified assets is often dealt with by the creation of a Private Trust Company, a Foundation or a Purpose Trust.

Private Trust Company - As the name suggests, a PTC will allow clients, their family members and professional advisors to form the board of Directors of their own incorporated trust company, which will act as trustee to family trusts. As such, they will be fully involved in the holding and administration of the higher-risk assets held in the trusts of which the PTC is trustee. The PTC is ultimately accountable to the family members who are beneficiaries of the trusts it administers. PTC boards will often include a professional Guernsey trustee, to add strength from a governance and administration perspective, but with reduced risk, as the Guernsey fiduciary is only one of a number of directors. Some PTCs will also take out their own PI insurance, giving further comfort to the professional fiduciary. Foundation - A Foundation will also be useful in the holding of higher risk assets, and the constitutional documents can enshrine that one of the purposes of the Foundation is to hold specific assets. This is perhaps a preferable route to the PTC, as the duties of the Foundation's councillors under law are towards the foundation itself (similar to a company), and not the foundation's beneficiaries.

Purpose Trusts - Another route to consider will be the use of a purpose trust, stating that one or more of the purposes is to hold certain assets - this is particularly useful for wasting assets, or for assets such as art collections which are to be held for the long-term enjoyment by present and future generations. "Hybrid" trusts can be created to combine purposes with a class of beneficiaries.

Reserved Powers Trusts - These forms of trust allow the settlor to retain powers to select and manage the trust investments, either by way of restricted power of attorney to manage the assets directly, or by directing the trustee. However, these trusts are not as widely used since the trustee can find itself in a difficult position if it becomes concerned around the management and ongoing suitability of the investments administered by the settlor using their reserved powers, notwithstanding indemnification terms in the trust document. This would inevitably lead to a difficult situation where the trustee might have to try and remediate the situation, or seek to have the settlor removed of their powers, or possibly resign.

Use of SPVs - In any of the above scenarios, further legal protection might be afforded if higher-risk assets are held via an SPV, rather than directly in the name of the trust or foundation. This will generally assist in ring-fencing any problems with the assets themselves - to prevent the parent structure and its other assets being drawn into any hostile actions.


I will leave the topic of tax to professional advisers, except to say that tax planning will often be an important issue - but not the sole issue in the design of structures. Particular care will be needed around the residency and domicile of beneficiaries who are internationally mobile e.g. someone who might acquire a footprint in a country such as the UK or US, including obtaining a US Green card. Tax considerations are also key for those persons who wish to be involved with the management and control of the structure in some way - such as co-trustee, councillor, protector or guardian. The place where meetings and decision-making will take place is very important - whether for the trustee, PTC directors or Foundation councillors. The situs of the proposed assets may also be relevant.


There could be other issues for international clients to consider when choosing the right structure. These might include: Forced heirship issues - does the client wish to benefit certain family members from a different way from that permitted under the heirship laws in the client's country of residence? If so, which are the unrestricted assets that the client can place into the structure, and how much (if any) control they can retain?

Philanthropic endeavours - will part of the wealth be set aside for charitable endeavours? Will there need to be some family representation to decide upon and oversee donations? It might be that more than one type of structure is used e.g. a trust for wealth planning, and a foundation for charitable endeavours.


The wide choice of structures now available in Guernsey offers clients flexibility to choose the most appropriate structure for their needs. The above issues will be key considerations in the planning stage, and clients and advisors will often need to take into account some or all of the above issues. There will often be "trade-offs" to consider. As an example, if the client seeks more control over a structure, this might come at the expense of confidentiality, and there may also be tax implications.

A "stress-test" exercise for a potential structure can be a useful tool - e.g. Will it withstand divorce? What if my children argue / or do not wish to become involved with managing wealth? Is there flexibility to amend the terms of the trust or foundation if circumstances change? Do I want anyone else to exercise my reserved powers as Founder when I am gone?

Asking these sorts of questions will assist clients and their advisors to choose the most suitable and robust structure for the client's long-term objectives.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.