About Jersey Trusts
Jersey is one of the most highly regarded trust jurisdictions in the world. Jersey's trust law dates back to 1984 and has subsequently been copied by many other jurisdictions.
Trusts are normally established to confer certain benefits which may include:
- Family succession planning
- Asset protection
- Tax mitigation
A trust is a legally binding arrangement whereby a person (known as a settlor) transfers assets to another person (known as a trustee) who is entrusted with legal title to the trust assets, not for his own benefit, but for the benefit of other persons (known as beneficiaries, who may include the settlor or for a specified purpose).
A settlor establishes a trust by appointing trustees and transferring the legal ownership of assets to those trustees. The trustees are responsible for managing the assets for the benefit of the beneficiaries. The details of this arrangement are recorded in a formal document 'the Trust Deed'.
The settlor may give the trustees specific instructions as to how to deal with and distribute the trust assets - 'a Fixed Trust'. Alternatively, the settlor may give the trustee discretion as to how to share the assets between the beneficiaries and when to make distributions - 'a Discretionary Trust'.
If the trust is discretionary, the settlor cannot insist that the trustees act in a certain way, however it is possible for a settlor to give the trustees guidance as to how he would wish them to act in a 'Letter of Wishes'. The trustee should always consider the terms of the Letter of Wishes in making any decision in relation to the trust or its assets. In addition, it is possible for a settlor to reserve certain powers where he may wish to maintain control of certain aspects of the trust - 'a Settlor Reserved Powers Trust'.
These powers might include:
- Investment management decisions over the trust
- Appointing and removing the trustees
- Appointing and removing beneficiaries
Although the trust assets are legally owned by the trustees, they are kept completely separate from any other property owned by the trustees. The trustees have a legal obligation to manage the trust assets in accordance with the Trust Deed and to ensure that the rights of the beneficiaries are protected.
A typical Trust structure
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.