Jersey: Family Unit Trusts In Jersey

Last Updated: 7 July 2016
Article by Steve Meiklejohn

A unit trust provides high net worth families with a flexible vehicle for acquiring and holding a variety of investments and family assets.

Unlike a discretionary trust, the unit trust enables beneficiaries to participate in any profits or income arising from the underlying trust fund pro rata according to the number of units they hold. At the same time the trust instrument can be drafted to ensure that certain specified family investments remain held by the trustee and are thereby preserved for future generations.

Where appropriate, the unit trust can be structured so that the units are held by the settlor during his lifetime but then pass to his heirs in a pre-determined manner on his death or incapacity.

A key advantage of the unit trust is its flexibility. The trust instrument can be drafted to meet a family's requirements in relation to:

  • the scope of the trustee's powers and the extent to which the trustee can direct investments;
  • the rights attaching to the units, including whether the units give their holders the right to use underlying assets held in the trust fund, or veto certain actions of the trustee;
  • the extent to which units can be transferred, redeemed or charged as security by their holders.

The unit trust can also provide a mechanism for enabling family members to become involved in the management of the family's wealth. Where the unit trust has a private trustee company as trustee it is possible for family members to populate the board of that company. Another option is to give certain investment powers to a committee which the family can populate and to include drafting in the trust instrument which obliges the trustee to action such committee's directions in relation to certain matters.

How is a Unit Trust structure established?

A Jersey Unit Trust (JUT) will come into existence on the execution of a trust instrument by a trustee and the transfer of the initial property to the trustee to be held in accordance with the terms of the trust. In consideration for the client vesting property in the trust, the trustee will issue units in the unit trust to the client and enter the client's name in a register of unitholders. Each unit issued represents an undivided share of the underlying trust fund and carries the rights attaching to such unit as set out in the trust instrument.

Where the JUT is to be used as an acquisition vehicle and there is a structural requirement for the trust to exist prior to the acquisition taking place, the initial transfer of assets to the trust can be of a nominal cash sum. Further capital can subsequently be introduced by way of equity injection through subscription for additional units and, if required, by way of debt leverage, to enable the trustee to finance the acquisition of investments. Lending can be arranged on a secured basis by having the trustee grant a legal charge over the underlying investments in favour of the lender.

Alternatively, where the client wishing to establish a JUT already owns the investments and simply wants to settle those assets in the trust, the JUT can be established by transferring the title to the investments direct to the trustee. Such a transfer would usually be effected by a contribution or subscription agreement together with execution of such transfer forms and such other registration formalities as may be required to transfer legal title to the investments to the trustee or its nominee.

A further option for establishing a JUT is for a nominal amount of assets to be settled on the trust in consideration for the issue of initial units in the trust.

If the JUT is a private vehicle with no more than 15 investors and there is no offering memorandum, the only Jersey regulatory requirement for establishing the trust will be to obtain consent from the Jersey Financial Services Commission (the "JFSC") to the raising of money by the issue of units under the Control of Borrowing (Jersey) Order 1958. Subject to the terms of the trust instrument being agreed and customer due diligence being provided, a JUT can be established and the necessary regulatory consent obtained within around 5 working days. There is no public register of unit trusts in Jersey and the trust instrument and register of unitholders are not open to public inspection. Where units in the JUT are to be offered to more than 15 investors it will be necessary to consider which of Jersey's fund regulatory regimes will be applicable to the structure.

Who should act as trustee?

The majority of JUTs are established with a newly incorporated Jersey special purpose company appointed to act as trustee. Whilst it is possible to appoint a professional trust company to perform this role, using a private trustee company has two main advantages. Firstly, it provides the unitholders with a greater degree of control over the JUT by enabling them to populate the board of directors of the trustee with nominated individuals. Secondly, if in the future there was a requirement to move the administration of the trust structure to a new administrator this can be achieved with minimal effort (and without disturbing the legal ownership of the underlying trust assets) by means of a transfer of the shares in the private trustee company. By contrast, where a professional trust company is trustee of the JUT and the unitholders subsequently wish to appoint a new trustee in its place, it would be necessary for the legal title to the trust assets and all contracts entered into by the professional trust company in relation to the underlying property to be assigned or novated to the new trustee.

Another advantage of using a private trustee company is that it ring fences the potential liabilities that might otherwise attach to the professional trust company. Where a professional trust company is used assets which might give rise to liabilities should be held indirectly using underlying corporate entities.

Who will own the trustee?

If a private trustee company is established to act as trustee of the JUT and it is commercially desirable to keep this entity "off balance sheet", its shares can be held by a foundation or purpose trust. Alternatively, the shares in the trustee could be held by the client directly.

Does a JUT require more than one trustee?

There is no Jersey legal or regulatory requirement for a JUT to have more than a sole trustee.

Where however the JUT is being established to hold English real estate in order to avoid technical difficulties arising under the doctrine of overreaching, it will frequently be preferable for the UK real estate to be held by two trustees. The use of joint trustees will enable a lender or purchaser transacting with the trustees to deal with them without being obliged to have regard to the equitable interests of the beneficiaries. Where there is a sole trustee, the overreaching problem can be avoided by arranging for title to the English real estate to be held by the trustee and by a nominee (or, alternatively, by two nominees) on trust for the sole trustee.

What duties do trustees owe unitholders ?

In addition to being regulated by the JFSC under the Financial Services (Jersey) Law 1998 (the "FS Law"), Jersey trustees are required to act in accordance with the Trusts (Jersey) Law 1984.

Under Jersey law, trustees have an obligation to act with due diligence, as would a prudent person, to the best of their ability and skill and in accordance with the terms of the trust instrument. Depending on the nature of the trust assets, the trustee may appoint a property manager or investment manager to deal with day-to-day management activities. In addition, trustees must observe the utmost good faith and exercise their powers solely for the benefit of the unitholders as beneficiaries.

There is no Jersey regulatory requirement for a manager to be appointed by the JUT, although one can be appointed if this is commercially desirable. Where a manager is required it will usually be made a party to the trust instrument to undertake management responsibilities and the trustee will tend to take on a more passive, custodian role.

Role of the unitholders

The relationship between the unitholders and the trustee will, to a large extent, be determined by the terms of the trust instrument. The trust can be structured to take into account any particular requirement a client may have in relation to interests in the trust and may, for example, determine the extent to which unitholders are able to take actions such as redeeming or transferring their units, removing an existing trustee or resolving that the trust be terminated. The trust may provide, for instance, that the prior consent of all unitholders is required to sanction such actions.

It should be noted, however, that where all of the unitholders are in agreement on a particular course of action and have full legal capacity, the Saunders v Vautier principle will apply, meaning that irrespective of the terms of the trust instrument, the unitholders may be able to alter the terms of the trust.

Unitholder control rights

There are various ways in which unitholders are able to control the actions of the trustee, although specific advice needs to be taken to ensure that any control rights reserved to the unitholders do not jeopardize any tax structuring objectives.

Common techniques include:

  • including in the trust instrument a schedule of reserved matters in relation to which the trustee may not take any action without the prior consent of all (or a specified majority) of the unitholders;
  • including within the trust structure an advisory committee to advise the trustee in relation to investment opportunities and other strategic decisions; and
  • using a private trustee company as trustee of the JUT with the unitholders nominating individuals to the board of directors.

What is a Baker Trust?

A JUT is often required to be a "Baker Trust". Named after the UK case Baker v Archer-Shee, this simply means that the trust instrument is drafted such that the income generated by the trust assets accrues directly to the unitholders as it arises, rather than forming part of the trust fund for later distribution by the trustees. This will generally result in a "pass through" investment vehicle and a tax transparent structure for most unitholders. The benefit of a Baker Trust is that the income of the JUT will be directly attributable to the unitholders pro-rata and they should be able to set off any expenses of the JUT against that income.

Are there any restrictions on making distributions?

In comparison to UK corporate investment vehicles, JUTs are extremely flexible. There are no Jersey legal or regulatory limitations on the exercise of the trustee's power to distribute trust assets to unitholders or the source from which such distributions may be made. For example, there are no restrictions requiring distributions to be made out of the realised profits of the trust fund and distributions may be made from the capital of a JUT without the need to satisfy a solvency or other test. Where there is more than one unitholder, the trust instrument will usually provide for distributions to be made in proportion to the units held.

Can security be granted over units?

It is possible to create security over units in a JUT and most UK banks are familiar with lending to JUTs on a secured basis. For the purposes of the Security Interests (Jersey) Law 2012, a unit is treated as being equivalent to a share in a limited company and, as such, is qualifying collateral for the purposes of a security interest agreement and securing a loan.

What are the regulatory considerations?

JUTs are extremely flexible in comparison to investment vehicles available elsewhere. For example, there are no leverage limitations or concentration restrictions, so that the trust portfolio may consist of a single asset. There are no restrictions on the percentage interests of a unitholder in the JUT nor on the number or type of classes of unit that may be issued.

Where there are fewer than 15 investors, a JUT will be treated as a very private structure and will not be regulated by the JFSC. If there will be more than 15 investors, it is likely that Jersey regulatory consents will be required, however, the level of regulatory supervision of the JUT will depend upon the sophistication of the investors and the minimum subscription required to be made under the terms of the trust instrument.

Where the minimum investment to be made by each unitholder exceeds US$1 million (or the currency equivalent) or the unitholders are professional or institutional investors, the JUT can be established as an "Eligible Investor Unregulated Fund" and will qualify for exemption from regulation in Jersey. As an Eligible Investor Unregulated Fund, the JUT will need to include a prescribed form of investment warning and a statement that the trust is unregulated. It will also require a notice to be filed with the JFSC but, subject to these conditions being met, the JFSC will not exercise any regulatory or supervisory powers in relation to the JUT's establishment or operation.

Where the minimum investment to be made by each unitholder exceeds US$100,000 (or the currency equivalent), the JUT may qualify as a Jersey "Expert Fund". Expert Funds are subject to a light regulatory touch and subject to certain conditions being met can be approved within three days of an application being made. These conditions include the trust instrument complying with prescribed content requirements, the board of the trustee company including two Jersey resident directors and the JUT appointing a Jersey administrator or manager as a "monitoring functionary".

For more detail on the regulatory treatment of funds in Jersey please see our briefing on Jersey Investment Funds – Regulatory options [insert link].

Does the Trustee need to be regulated?

The trustee of a JUT will need to either be regulated to carry on trust company business pursuant to the FS Law, or to fall within a relevant exemption pursuant to such Law. Where the client wishes to use a private trustee company in the structure, the company will usually be able to bring itself within the "private trust company exemption" pursuant to the FS Law.

If the trust assets comprise more than cash and real estate, it is likely that the assets will fall within the definition of "Investments" for the purposes of the FS Law. This can result in the trustee being regarded as carrying on investment business under the FS Law in addition to trust company business.

Provided each unitholder makes a minimum subscription of Ł250,000 (or the currency equivalent) or is a professional investor it is possible to structure the JUT as a so called "professional investor regulated scheme" pursuant to the Investment Business provisions of the Financial Services (Investment Business (Restricted Investment Business-Exemption)) (Jersey) Order 2001. This enables the trustee to avoid the need to be regulated to carry on investment business under the FS Law provided each investor in the scheme has received and signed an investment warning in the prescribed form.

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

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

In association with
Up-coming Events Search
Font Size:
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
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

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