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Offshore Trusts Report: Guernsey

Guernsey Trusts Law 2007

In September 2005, the Guernsey FSC launched a consultation with trust professionals, lawyers, accountants and regulators to: investigate the requirement for changes to enable new trust products and services to be available to the Fiduciary Sector in Guernsey; to consider the availability of competitor trust products and services from other jurisdictions; to consider marketing requirement for the Fiduciary Sector; and to make recommendations for the desired changes.

The introduction of the new trust legislation in Guernsey was viewed by practioners in the field as a demonstration of the jurisdiction's adaptability and flexibility in reacting to changing market situations and conditions.

The Trusts (Guernsey) Law, 2007 was designed to create a more flexible framework for the local trust industry, and to ensure that Guernsey, as a jurisdiction for the establishment and administration of fiduciary structures, remained well placed and competitive.

Some of the key major changes incorporated in the new law are summarised below:

  • The introduction of (non-charitable) Purpose Trusts;

  • Removal of limits on the length of a trust’s duration – allowing perpetual trusts;

  • Clarification of the position of retiring trustees, making the transfer process more streamlined;

  • Clarification of the circumstances under which information has to be given to beneficiaries;

  • Abolition of the liability of directors of corporate trustees based in Guernsey or acting as trustees of Guernsey law trusts, particularly as a way to encourage greater use of Private Trust Companies (PTCs); and

  • Revision of arrangements regarding limitation periods and Alternative Dispute Resolution (ADR).

The new law has its roots in a series of proposals made in the ‘Evans Report’, which was published following a root and branch review of the Island’s trust legislation by a working party under the chairmanship of Guernsey advocate Rupert Evans.

“This is yet another example of how the Guernsey government, the Island’s financial regulator and its industry practitioners, continually work together to maintain an environment that maximises business flows,” stated Peter Niven, Chief Executive of GuernseyFinance – the promotional agency for the Island’s finance industry.

One of the most significant changes brought about by the new law was the introduction of non-charitable purpose trusts. Commenting on this change, Carey Olsen, the largest law firm in the Channel Islands, stated:

"Rather than bringing in a completely separate regime for purpose trusts - a route preferred by certain other jurisdictions such as Cayman and the BVI - Guernsey has simply revised the law to remove the requirement for there to be beneficiaries to a trust."

"Purpose Trusts are commonly employed to incorporate private trust companies which in turn act as trustees to specific trusts (or groups of trusts). Private trust companies in Guernsey may apply to the Guernsey Financial Services Commission for a discretionary exemption from licensing. As part of the exemption process the Commission will normally impose restrictions on the activities of the company to prevent it providing services to the public."

Another major change was the removal of the 100 year time limit for newly-formed trusts.

"It was never really clear why in 1989 the draftsman limited the duration of Guernsey trusts to 100 years as the rules against perpetuities have never formed part of Guernsey law," commented Carey Olson. "Perpetual obligations were well known to Guernsey's customary law and formed the bedrock of our land law and conveyancing system."

The firm continued: "Instead of extending the period during which a trust can exist, the new law reverts to the status quo ante and removes the previous 100 year time limit for Guernsey trusts allowing perpetual trusts to be created. The limit of 100 years for existing trusts is retained."

"It will of course be possible for the draftsman of a trust to provide for a limited trust period where, for example, it is necessary to consider the application of a foreign rule against perpetuities in relation to the transfer of assets from a foreign trust to a Guernsey trust. The revised legislation also permits assets to be decanted from one trust to another even where the second trust is of a longer duration than the first - putting an end to the ongoing debate amongst local practitioners as to whether this was allowed under the original 1989 law."

The Report

Offshore Trusts Guide: Introduction

Offshore Trusts Guide: Jurisdictions

Bahamas Barbados Bermuda British Virgin Islands Cayman Islands Cook Islands Cyprus Gibraltar Guernsey Isle of Man Jersey Liechtenstein Madeira Malta Mauritius Monaco Nevis New Zealand Panama Seychelles Turks & Caicos Vanuatu

Guernsey News

Guernsey's 10-Year-Old Trusts Law 'Ahead Of Its Time'
Friday 23/3/2018
Guernsey's trusts law, which came into force 10 years ago, has been described as "ahead of its time" and "a reminder of the jurisdiction's ability to innovate and adapt to changing market conditions" by leading trust and fiduciary lawyer Russell Clark.

Guernsey Finance Strengthens Hong Kong Presence
Thursday 8/3/2018
Guernsey's financial services promotion agency, Guernsey Finance, says its Hong Kong office has yielded significant benefits for the territory over the past 15 months.

Guernsey Foundations Near 100 Mark
Tuesday 9/1/2018
Almost 100 foundations have now been registered under the Guernsey's five-year-old Foundations Law, Guernsey Finance, the island's financial services promotional agency, has said.

Guernsey, China In Landmark Captive Insurance Partnership
Friday 1/12/2017
Guernsey-based independent insurance manager Alternative Risk Management and Beijing Airport Captive Management Consulting have established a joint venture to create captive structures and provide captive management services for Chinese businesses.

Guernsey Expertise Tapped By Wealthy Philanthropists
Monday 9/10/2017
A sizable new stream of business for the legal sector and other professional service providers is emerging as Guernsey becomes recognized as a centre of excellence for the founding of charitable and philanthropic structures, Guernsey Finance says.

Guernsey Finance Marks A Decade In China
Wednesday 27/9/2017
The signing of cooperation deals with Chinese regulators and industry associations provided Guernsey with the foundation to develop business and build relationships with Chinese service providers and their clients, a recent conference was told.

Cayman Islands Named Leading Specialized IFC
Friday 8/9/2017
The Cayman Islands has again been named the world's number one specialized financial center by the Banker magazine, part of the Financial Times Group.

Abu Dhabi Tax-Free Zone To Launch Foundations
Friday 2/6/2017
Abu Dhabi Global Market, the low-tax international financial center, is seeking feedback on its proposal to allow the formation of "foundations," a trust-like entity widely used in civil law jurisdictions.

Guernsey Issues Warning On 'Sark Company Registry'
Thursday 18/5/2017
The Guernsey Financial Services Commission has issued a warning concerning an entity named "Sark Company Registry," while investigations are ongoing.

Guernsey Funds Sector Grew In 2016
Monday 27/3/2017
The total value of funds business in Guernsey grew by more than GBP28bn (USD32.5bn) last year.