Amendment No. 7 to the Trusts (Jersey) Law 1984 (as amended) (Trusts Law) has been lodged with the States of Jersey for review and approval. This briefing will focus on the fundamental changes introduced by Amendment No. 7 into the Trusts Law. It is anticipated that the Amendment No. 7 will come into force in the next few months.
A new definition of "Officer"
This new definition will cover a myriad of positions as follows:
- A director, manager, secretary or other similar officers of a corporation;
- A foundation council member;
- A general partner or a limited partner participating in management of an incorporated or separate limited partnership;
- A partner of a limited liability partnership; and
- Any other person purporting to act in a capacity as above.
Reserved Powers by a Settlor - Article 9A
Various minor amendments will clarify and enhance Article 9A. The fundamental amendment is a new Article 9A(3A) confirming that the holding of a reserved power or interest does not of itself constitute the holder a trustee.
Rights of Beneficiaries to Information - Article 29
Article 29 will be re-worded to remove the double negative language and to clarify that a trust instrument may:
- Confer right to request disclosure; or
- Determine the extent of the right to information; or
- Impose a duty upon a trustee to disclose information to any person.
Hence a trust instrument can restrict the provision of information to beneficiaries. However, such restrictions are not completely prohibitive (i.e. it will be invalid to remove the ability to inspect trust accounts) and any restriction must generally be considered against the principles of accountability to beneficiaries.
There is a continuation of established principles that trustees' deliberations and reasons are not disclosable, but subject to the terms of the trust and a court order.
Furthermore, a beneficiary, enforcer or another person with leave of the court will retain the ability to apply to the court for further access to information and the court retains an overarching discretion in its supervisory jurisdiction of the trust.
Retention & Accumulation of Income - Article 38
Sub-Articles 38(1) and 38(2) are being rewritten for better clarity as to the accumulation and character of income. In addition, a new sub-article 38(2A) is being introduced so, subject to the terms of the trust, there shall be no time period within which a power to accumulate income and add it to capital, to retain income in its character as income or to distribute income must be exercised.
A new Article 43A will exist dealing with a trustee's entitlement to "reasonable security" upon:
- Ceasing to be a trustee; or
- Distributing trust property; or
- The trust being terminated or revoked.
Article 43A will also cover the rights of third parties (such as a trustee's officers) to enforce an indemnity despite not being party to the indemnity contract. Hence the existing Article 34(2A) will be repealed.
Ultimately the change Article 43A introduces is to reflect the long-established industry practice of indemnification upon distribution of trust property.
Power of the court to vary a trust – Article 47
Essentially, Article 47(1) limits the court's power of variation in the management or administration of the trust to provide consent on behalf of those who cannot consent for themselves (e.g. minors, interdicts and unborns). The court cannot, for example, approve a variation on behalf of an adult beneficiary with legal capacity. Whilst this position is not changing per se, new provisions will provide two practical exceptions to it permitting the court to provide consent to a variation on behalf of beneficiaries who:
- The court is satisfied cannot be found, despite reasonable attempts to locate them, and
- Due to their number, it is practically unreasonable for such persons to be contacted.
The amendments will not fundamentally change the existing trust law of Jersey, but will look to helpfully clarify certain areas and introduce some new provisions to continue to develop Jersey's place as a competitive jurisdiction for private wealth administration.
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.