Jersey Trusts Amendment Act 2006
In early 2005, the government published a consultation paper proposing significant amendments and enhancements to the Island’s Trusts Law. Five main amendments were proposed.
The paper noted some criticism of the existing anti-forced heirship provisions contained in Article 8A of the Trusts Law and proposed either amending the existing article or deleting it entirely and replacing it with a new article. It is also proposed that Article 8A(2) of the Trusts Law should apply to all individuals, not just persons domiciled outside Jersey.
The paper proposed that a new article should be added to the Trusts Law to confirm that the reservation, or grant to another person, by a settlor of any powers from a defined list should not invalidate the trust, and also to allow the statutory duty of care imposed on trustees to be written out by the trust instrument.
The paper also proposed that Article 25 of the Trusts Law should provide that the requirement to disclose trust documents and accounts to beneficiaries shall be “subject to the terms of the trust”, though a beneficiary will retain a right to seek from the Royal Court (i) a declaration that in the particular circumstances the trustees are not sufficiently accountable to the beneficiaries, and (ii) an order extending or restricting the rights of beneficiaries to information.
The fourth proposals was to amend Article 28 of the Trusts Law to remove some perceived ambiguities in respect of the liabilities of trustees in dealing with third parties.
Lastly, the paper proposed that retiring and former trustees should have a non-possessory lien over the trust property. This would give former trustees a right, if they find that they have a liability relating to the trust, to follow trust assets into the hands of successor trustees and even beneficiaries.
This consultation laid the groundwork for the The Trusts (Jersey) Amendment No. 4 Law 2006, which became law on October 27 that year. The amendments were designed to maintain and enhance Jersey’s position as one of the world’s leading international trust jurisdictions by ensuring that its trusts legislation responds to developments in other jurisdictions and remains internationally competitive.
Among the amendments was the introduction of settlor-reserved powers, which will provide greater statutory certainty regarding the level of control and influence a settlor may exercise, in appropriate circumstances, over the ongoing administration of assets placed into trust. The powers that may be reserved by the settlor will include the power to appoint and remove trustees, to amend or revoke the terms of the trust and to appoint or remove an investment manager or investment adviser
The amendments also permit a trustee to delegate any of his or her trusts or powers if permitted by the terms of the trust.
Other amendments include conflict of law provisions which will mean that the validity of a trust governed by Jersey law is not be affected by any rights conferred on anyone under a foreign law, and a proposal that removes the existing automatic ‘personal guarantor’ provisions for directors of corporate trustees, thereby making it more attractive to establish private trust companies in Jersey.
Beverley Le Cuirot, Director of Marketing of Jersey Finance, observed at the time that:
“The changes brought in under the Amendment No. 4 Law are the most significant since the Trusts (Jersey) Law came into force in 1984. The purpose is to clarify and enhance the existing Law, and to bring greater certainty to key questions concerning the validity of Jersey Trusts and the powers that may be retained by the settlor of a Jersey Trust.
“In addition, the Amendment will remove a number of provisions in the principal Law which were perceived by some practitioners as limiting the attractiveness of Jersey as a centre for very high net worth private family trust business.
In July 2008, Jersey's Economic Development Department issued on Thursday a consultation paper reviewing the Island's trusts law with a view to ensurong that they remainsup to date, reflects recent international developments, and continues to provide a framework that confirms Jersey’s position as a market leader.
Senator Philip Ozouf, the Minister for Economic Development, commented:
“The Trusts Law has been to a great extent the engine for the growth of our financial services industry in the last 20 years. Our Law was the first in the market place and others have followed our lead. Subsequently, trusts laws in other places have evolved and in some cases moved ahead of our own product. This consultation is designed to see how we should develop our Trusts Law so as to hone our competitiveness.”
The consultation paper covered ten discrete areas of possible reform with a view to developing Jersey’s trusts legislation in a way that ensures the maximum overall benefit for the Island. Responses were invited by 19 September 2008.
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