The Trusts (Guernsey) Law, 2007, became effective
from Monday 17 March 2008. It replaces the Trusts (Guernsey)
Law, 1989, as amended.
Non-Charitable Purpose Trusts
It has introduced non-charitable Purpose Trusts. Under the
legislation it is made perfectly clear that trusts established
to hold property or to exercise functions without conferring
benefit on any person are valid.
Purpose Trusts are commonly employed to incorporate Private
Trust Companies (PTCs) which in turn act as trustees to
specific trusts (or group of trusts).
Removal of limits on the length of a trust's
The Trusts (Guernsey) Law, 1989, limited the duration of
Guernsey trusts to 100 years even though the rules against
perpetuities had never formed part of Guernsey law. The new law
reverts to the status quo ante and removes the previous 100
year time limit for Guernsey trusts, allowing perpetual trusts
to be created.
It will of course be possible for the draftsman of a trust
to provide for a limited trust period where, for example, it is
necessary to consider the application of a foreign rule against
perpetuities in relation to the transfer of assets from a
foreign trust to a Guernsey trust.
The revised legislation also permits assets to be decanted
from one trust to another even where the second trust is of a
longer duration than the first.
Clarification of the Position of Retiring Trustees
The new law creates a non-possessory lien over trust assets
in favour of the retiring trustees and simplifies the ability
of a previous trustee to enforce an indemnity given in its
favour where it is not a party to the document by which the
indemnity is given. This should facilitate speedy changes of
Clarification of the circumstances under which information
has to be given to Beneficiaries
Under the new regime it is recognised that there can often
be good reasons for some beneficiaries to be denied information
relating to the trust. The 2007 law has been drafted in such a
way that the terms of the trust may expressly exclude
discretionary beneficiaries' rights to information but
without denying the overriding right of any beneficiary to
apply to the court for information. The person seeking the
information which the settlor has taken the trouble to deny him
would have the burden of proving why disclosure was necessary.
It remains the case that the trustee must be accountable for
Abolishment of Liability of Directors of Corporate
Under the 1989 law, directors of corporate trustees based in
Guernsey or acting as trustees of Guernsey law trusts are
personally liable as guarantors in respect of damages or costs
awarded against the corporate trustee for a breach of trust.
The 2007 law repeals this clause in its entirety. Directors
will remain personally exposed in relation to any breach of
trust claim initiated before the Royal Court prior to the date
when the new law comes into effect.
Limitation Periods and Alternative Dispute Resolution
Changes have been made to the effect that no action founded
on breach of trust may be brought against a trustee after the
expiration of 18 years immediately following the date of the
Any order, judgment or finding of law or fact of the Court
in an action against a trustee founded on breach of trust is
binding on all beneficiaries of the trust whether or not yet
ascertained or in existence, provided they were represented
either personally or as a member of a class. There are similar
provisions for ADR procedures.
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