In Representation of X Trustees Limited  JRC
136, the Court was asked to approve variations to a
settlement on behalf of the Settlement's minor, unborn and
unascertained beneficiaries in accordance with the Trusts (Jersey)
Law 1984 (the Law).
Article 47 of the Law provides that the Court may approve
certain actions, including variations, on behalf minor, unborn and
unascertained beneficiaries where the action appears to the Court
to be for the benefit of the relevant beneficiaries.
The Trustee wished to vary the Settlement in order to:
(i) extend the trust period of
the Settlement which was due to expire in 2016; and
(ii) give the Trustee greater powers to accumulate income for
Both variations had the support of the Settlement's adult
It was for the Court to decide whether these variations were in
the interests of the minor, unborn and unascertained beneficiaries
of the Settlement in accordance with Article 47(2).
In relation to the first variation, the Court considered that,
were the Settlement to expire in 2016, a capital gains tax charge
would be triggered and the assets would fall within the scope of UK
inheritance tax as the beneficiaries are resident in the UK.
Having considered In the matter of the DDD
Settlements  JRC 243, where tax planning was found
to be a benefit, the Court held it was for the benefit of the
minor, unborn and unascertained beneficiaries to allow the
Settlement to continue to grow outside of the UK and that this
could be achieved by extending the trust period.
In relation to the second variation, the Court noted that the
assets of the Settlement consisted of shares in an underlying
company, meaning there was no income accumulation. While allowing
income accumulation might not result in any immediate benefit to
the relevant beneficiaries, the Court considered that such a change
would allow the Trustee to manage the Settlement more efficiently
for the future.
It was therefore held that by removing the current inflexibility
on income accumulation, the Trustee could control the flow of
income in a planned way for the benefit of the minor, unborn and
Finding that both variations were for the benefit of the
relevant beneficiaries, the Court therefore gave its approval in
accordance with Article 47.
Previous case law has found that "benefit" for the
purposes of Article 47 is to be construed widely and is not limited
to financial interests. This case demonstrates that tax planning
and management of trust funds may also be considered
"benefits" when asking the Court to approve variations to
Settlements under Article 47.
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.
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