Jersey: Advancing The Private Client Landscape

Last Updated: 21 April 2016
Article by Sevyn Kalsi and Katherine Neal

Most Read Contributor in Jersey, September 2018

Sevyn Kalsi and Katherine Neal discuss the legal frameworks and standards that have allowed Jersey to establish itself as a transparent, modern, and attractive jurisdiction for private wealth matters.

Jersey is a self-governing British Crown Dependency, and is the largest of the Channel Islands lying some 15 miles off the north-west coast of France.

Its legal system is derived, in part, from the customary laws of Normandy and, although strongly influenced by the laws of England and those adopted in other Commonwealth countries, Jersey creates its own laws, has its own court system and offers a tax-neutral environment. All of which provides certainty for those considering the jurisdiction as a platform for private wealth, charitable and commercial structures

Despite its relative size, Jersey has established itself as one of the world's leading financial centres, with its political and economic stability and modern, robust and comprehensive legal infrastructure. This coupled with Jersey's wealth of highly skilled, forward thinking and commercially aware trust, legal, tax, banking and finance specialists maintains Jersey at the forefront of global finance and private wealth matters. 

Common Reporting Standard (CRS) and client diligence (CDD)

In addition to being party to various double tax agreements, Jersey has highlighted its commitment to global transparency by being one of the "early adopters" of the CRS.

Similar to the Foreign Account Tax Compliance Act (FATCA), which is concerned with tax information gathering in relation to US persons for the US's Internal Revenue Service, the goal of the CRS is to gather tax information regarding those resident in CRS participating jurisdictions (held by financial institutions in other participating jurisdictions) and to report such information to the relevant tax authorities of their jurisdiction of residence.

At present, over 90 countries have committed themselves to the CRS of which the "early adopters" have undertaken to make the first tax information exchanges by 2017.

At a local level, the Anti-Money Laundering and Countering the Financing of Terrorism handbook produced by the Jersey Financial Services Commission (the JFSC) sets out detailed guidelines to ensure Jersey's compliance with international standards to prevent and detect money laundering and the financing of terrorism, whilst promoting the use of a proportionate, risk based approach to CDD measures.

Trusts

The Trusts (Jersey) Law 1984 (as amended) (the Trusts Law) is widely regarded as the international standard for offshore trust legislation and has been adopted as the basis of the trust law of a number of other jurisdictions.

Although the discretionary trust is arguably the most widely used form of Jersey trust, on the basis of the flexibility that it affords, other common forms of Jersey trust include fixed interest trusts, accumulation and maintenance trusts, charitable purpose trusts and non-charitable purpose trusts (this final category being specifically permitted by the Trusts Law). Non-charitable purpose trusts are used for a variety of purposes (such as for philanthropic, but not strictly charitable purposes, or to hold shares in a company or a private trust company). However it is a requirement that an enforcer is appointed so as to enforce the terms of such trusts in relation to their purposes.

Jersey trusts can be of unlimited duration and are commonly used for the preservation of wealth, dynastic and succession planning and to circumvent forced heirship rules that may have otherwise applied on the death of the settlor had the assets not been settled into trust. They can also be used for asset protection purposes by providing an additional layer to protect assets from claims on the bankruptcy or divorce of beneficiaries, and in a wide variety of commercial contexts such as unit trusts or in relation to pension, employee benefit and share incentive schemes.

There is no requirement to register trust documents with a government office or agency, and the Financial Services (Jersey) Law 1998 (as amended) (the Financial Law) also imposes minimum standards on professional trustees and requires them to adhere to certain criteria in addition to being licensed by the JFSC.

As a general proposition, judgments of foreign courts or tribunals do not, per se, have legal effect in Jersey and the Trusts Law provides that the validity or interpretation of a trust, the validity or effect of any transfer or other disposition into trust and the nature and extent of any beneficial right or interest in the trust property shall (amongst other matters) be determined in accordance with the law of Jersey, and no rule of foreign law shall affect such question. These principles, enshrined in Article 9 of the Trusts Law, are commonly known as Jersey's "firewall legislation".

Foundations

Foundations can be created for charitable objects, non-charitable objects or a mixture of both, and are particularly favoured in common law jurisdictions where the concept of trusts is less well known. Since the introduction of the Foundations (Jersey) Law 2009, Jersey foundations have found their own place as an alternative to certain traditional arrangements particularly in the context of wealth management, structuring and succession planning as well as for philanthropy and wider charitable giving.

Jersey foundations enable the founder and/ or beneficiaries to be involved in their day to day management, by being able to sit as members of the council of the Foundation (the Council), which can be a particular motivation for some individuals. There is also no requirement for the identities of lay members of the Council to be made public thus, if relevant, allowing such persons to maintain legitimate confidentiality. Each Council, however, must have one qualified member, essentially a regulated trust company.

The regulations of the Jersey foundation can be drafted so as to allow the appointment of "advisory groups" to the Council that would, for example, allow older members of a family to sit on the Council whilst permitting younger generations to sit on such advisory groups, almost as a form of training for their future involvement with the foundation. This can be of particular interest to large families, or those with complex relationships, who are keen to involve younger generations.

Unlike Jersey trusts, Jersey Foundations have a separate legal personality. They can last for an unlimited duration and can hold a wide variety of assets, including higher risk classes of assets that trustees may otherwise be reluctant to consider (such as wasting assets, private equity interests and so forth).

Jersey foundations are sometimes referred to as "orphan vehicles", as they do not have shareholders or an owner. This characteristic has lent itself to them being used as private trust companies (PTCs), which act as trustees of trusts, as there is no need to consider additional layers of ownership above the Jersey foundation itself. Jersey Foundations can also be used to fulfil roles such as a protector or other power holders of trusts, or as alternative investment vehicles.

Whilst the majority of Jersey foundations established to date have been newly incorporated vehicles, the current legislation provides a clear framework for migrating so called "recognised entities" (foreign foundations or other corporate entities) to Jersey.

Private Trust Companies

A PTC is an entity whose sole purpose is to act as trustee in relation to a specific trust or trusts (and which does not solicit from or provide trust company services to the public). The board of directors of the PTC can consist of professionals or a mixture of professionals and lay persons, and Jersey PTCs are increasingly used by individuals who choose to establish their own PTC as an alternative to transferring assets to a professional trust company. Although a disadvantage of using a PTC can sometimes be the cost of establishment, in the majority of cases the added comfort of having a dedicated bespoke trustee for a trust or group of trusts can far outweigh this. The annual running costs of a PTC can also, in some instances, be less than those of a public trust company.

The Financial Law, the principal legislation regulating Jersey's trust company industry, provides that a person carrying out trust company business must be registered with the JFSC. However, under ancillary legislation, a Jersey PTC is exempt from this requirement on the fulfillment of various "light touch" criteria (such as the notification of its name to the JFSC). Further, there is no requirement for copies of documents in relation to the trust or trusts for which the PTC will be acting as trustee to be filed.

With regard to ownership, shares in a PTC can be held by an individual (however this, itself, may raise practical concerns regarding succession on the death of the owner), within a purpose trust or by a Jersey foundation (which can also, as discussed above, act as a PTC itself).

Why not?

As a jurisdiction, Jersey has worked hard to distance itself from the perception held by some that it is a clandestine tax haven and has taken huge steps to portray itself as a transparent, modern and attractive jurisdiction. Some of the matters set out in this article demonstrate the advances that have been made.

This article first appeared in Solicitors Journal April 2016

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 Mondaq.com.

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

Authors
Similar Articles
Relevancy Powered by MondaqAI
Walkers
Walkers
Bedell Cristin
Bedell Cristin
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Walkers
Walkers
Bedell Cristin
Bedell Cristin
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions