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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

The History of Offshore Trusts
Development of Professional Competence in the Jurisdictions
What Future for the Trust?
The New Age of Transparency
The Swiss Association of Trust Companies
The Society of Trusts and Estates Practitioners

Offshore Trusts Guide: Jurisdictions

Bahamas

Bahamas: Legal Framework and Formation Rules and Fees
Bahamas: 2006 Private Trust Companies Legislation

Barbados

Barbados: Legal Framework and Formation Rules and Fees
Barbados: Supervisory and Licensing Regime and Fees

Bermuda

Bermuda: Legal Framework and Formation Rules and Fees
Bermuda: Supervisory and Licensing Regime and Fees

British Virgin Islands

British Virgin Islands: Legal Framework and Formation Rules and Fees
British Virgin Islands: Special Trusts Act 2003
British Virgin Islands: The Trustee Act 2003
British Virgin Islands: :Supervisory and Licensing Regime and Fees
British Virgin Islands: New Laws on Private Trust Companies
British Virgin Islands: New Private Trust Company Regulations

Cayman Islands

Cayman Islands: Legal Framework and Formation Rules and Fees
Cayman Islands: Supervisory and Licensing Regime and Fees

Cook Islands

Cook Islands: Legal Framework and Formation Rules and Fees
Cook Islands: Supervisory and Licensing Regime and Fees

Cyprus

Cyprus: Legal Framework and Formation Rules and Fees
Cyprus: Supervision, Licensing and Tax

Gibraltar

Gibraltar: Legal Framework and Formation Rules and Fees
Gibraltar: Legislation, Regulation and Supervision

Guernsey

Guernsey: Legal Framework and Formation Rules and Fees
Guernsey: Trusts Law 2007

Isle of Man

Isle of Man: Legal Framework and Formation Rules and Fees
Isle of Man: Supervisory and Licensing Regime
Isle of Man: Uses Clients and Tax Treatment

Jersey

Jersey: Legal Framework and Formation Rules and Fees
Jersey: Supervisory and Licensing Regime
Jersey: Trusts Amendment Act 2006
Jersey: Foundations

Liechtenstein

Liechtenstein: Legal Framework and Formation Rules and Fees
Liechtenstein: Regulation Supervision and Transparency
Liechtenstein: Characteristics of Liechtenstein Trusts
Liechtenstein: Foundations

Madeira

Madeira: Legal Framework and Formation Rules and Fees

Malta

Malta: Legal Framework and Formation Rules and Fees
Malta: The Trust and Trustees Act 2004

Mauritius

Mauritius: Legal Framework and Formation Rules and Fees
Mauritius: Characteristics of the 2001 Trusts Act
Mauritius: Additional Provisions of the 2001 Trusts Act
Mauritius: Tax Treatment

Monaco

Monaco: Legal Framework and Formation Rules and Fees

Nevis

Nevis: Legal Framework and Formation Rules and Fees

New Zealand

New Zealand: Legal Framework and Formation Rules and Fees
New Zealand: Review of the Law of Trusts
New Zealand: Taxation of Trusts

Panama

Panama: Legal Framework and Formation Rules and Fees
Panama: Requirements for Acting as Trust Company in Panama

Seychelles

Seychelles: Legal Framework and Formation Rules and Fees

Turks & Caicos

Turks & Caicos: Legal Framework and Formation Rules and Fees
Turks & Caicos: The Voidable Dispositions Ordinance

Vanuatu

Vanuatu Legal Framework and Formation Rules and Fees

 


Guernsey News

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.

Guernsey Introduces Client Asset Handling Rules Wednesday 22/2/2017 Guernsey's financial services regulator, the Guernsey Financial Services Commission, said it intends to introduce rules governing the holding and administration of client assets in 2017.

Guernsey Regulator Outlines 2017 Funds Strategy Monday 2/1/2017 Guernsey's financial services regulator, the Guernsey Financial Services Commission, has outlined its funds sector strategy for 2017.

Channel Islands Exchange Attracting New Listings Thursday 3/11/2016 Steps taken by the Channel Islands Stock Exchange to enhance and diversify its offerings contributed to a 13 percent increase in new business during the first half of the year.

Guernsey Funds Sector Continues To Grow Thursday 16/6/2016 Figures released by the Guernsey Financial Services Commission show continued growth for Guernsey-based funds.

Guernsey Tells UK It's Committed To Transparency Monday 9/5/2016 Gavin St Pier, the President of Guernsey's Policy and Resources Committee, has reiterated Guernsey's support for the automatic exchange of beneficial ownership information in a letter to Britain's Prime Minister.

Guernsey Government's Investments To Be Locally Managed Thursday 21/4/2016 In a move to support the local finance industry, Guernsey's Government has announced that it is to create an investment pool, which will be managed by Guernsey-based investment managers.

Guernsey Seeking Fiduciary Industry Growth Monday 7/3/2016 KPMG in the Channel Islands has released the findings of its Government-commissioned review into prospects for Guernsey's fiduciary industry.