Traditionally trusts were established to provide either for
beneficiaries or to further a charitable purpose. A Purpose
Trust is a type of trust which has no beneficiaries but instead
exists for advancing a non- charitable purpose of some
Trusts for charitable purposes are also technically Purpose
Trusts, but they are usually referred to simply as Charitable
Trusts. People referring to Purpose Trusts normally are usually
taken to be referring to Non-Charitable Purpose Trusts.
In most jurisdictions, they are usually unenforceable (there
are limited exceptions) but Guernsey has enacted legislation
specifically to promote the use of Non-Charitable Purpose
When using offshore structures to assist in tax, estate
planning or company restructuring, it may be of considerable
assistance to create a trust in which no company, or
individual, has a beneficial interest.
The terms of a Purpose Trust must define the valid
purpose(s) to which the trust fund may be applied. Under
Guernsey law a trust for non-charitable purposes must not be so
uncertain that its performance is rendered impossible, contrary
to public policy, or immoral.
There are no other limitations imposed by law. A trust
established to hold assets or to exercise functions is
expressly stated to be valid. The law also envisages hybrid
trusts where there may be beneficiaries and purposes.
A Purpose Trust must be created in writing to avoid problems
caused by incomplete oral gifts.
Without beneficiaries there is no ascertainable person to
enforce a Non-Charitable Purpose Trust. Therefore an
Enforcer' must be appointed to act. A positive duty
will be introduced to compel trustees to appoint an Enforcer if
there is none in office. Equally if the Enforcer is not capable
of acting or alternatively is refusing to act the trustee must
initiate action to have the Enforcer replaced.
It is the fiduciary duty of the Enforcer to police the
trustees and to enforce the stated purposes of the trust. A
trustee cannot also serve as an Enforcer of the same trust but
the law does permit employees or associated companies of a
trustee to serve as Enforcer.
The new Trusts Law specifies that there is no limit upon the
duration of any Guernsey trust, including Purpose Trusts.
Guernsey's fiduciary offering
These legislative developments are further to
Guernsey's 50 years experience in providing fiduciary
services, which has cultivated a wealth of expertise and a
first class infrastructure.
The Island plays host to some 140 licensed fiduciaries,
ranging from international organisations to independent
operations, holding between £200bn and £300bn of
assets in trust. The industry's highly skilled
workforce is complemented by a network of sophisticated legal,
accounting, tax and actuarial advisers, making it an ideal home
for Purpose Trusts.
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