Significant enhancements to Jersey’s trusts law approved by Privy Council this week will make Jersey an even more attractive location for private wealth management business, according to Jersey Finance.
The most recent amendments, contained in the Trusts (Amendment No.5) (Jersey) Law, were adopted by Jersey’s Government in November last year and approved by the UK Privy Council on Wednesday 17th October. The Law is expected to be registered in the Royal Court on or before 2nd November, coming into force seven days later.
Overall, the changes are designed to bring clarity and certainty in a number of key areas, with the wealth management industry generally shifting away from the more simple trust structures to higher value and more complex vehicles. Amongst the key measures in these latest changes are:
• Introduction of a Definition of Purpose: this change introduces for the first time a definition of purpose which includes the acquisition, holding, management or disposal of property. Accordingly, it will be possible to establish ‘ownership only’ purpose trusts.
• Limitations of Actions or Prescription: a significant amendment that limits a trustee’s liability (subject to fraud or recovery of trust property claims), which previously was almost indefinite. It will mean that action against trustees will only be possible up to 21 years after the alleged breach of trust. The limitation does not apply to foreign trusts whose proper law is the law of a jurisdiction to which the Hague Convention extends.
• Definition of a Protector: this amendment introduces a definition of the ‘protector’ as a person, other than a trustee, enforcer or beneficiary, who holds a power, discretion or right in connection with a trust.
• Protection from Foreign Interference: the amendment is designed further to strengthen Jersey’s trust vehicles from attack by foreign courts.
• Remuneration of Professional Trustees: this will permit professional trustees to be paid reasonable fees even when the trust deed is silent on the matter, but only in respect of services provided after the amending Law comes into force. Previously, trustees were only remunerated for their services if authorised by the terms of the trust or by Order of the Royal Court.
• Position of Outgoing Trustees: this amendment relates to the transition when there is a change in trustee, giving the outgoing trustee the right to enforce a term of a contract providing reasonable protection against liabilities, i.e. indemnities, even though not a party to the contract.
• Trustees Transacting with themselves on behalf of different trusts: this amendment provides clarity in expressly permitting trustees to contract with themselves in respect of two or more trusts for which they are trustee.
Geoff Cook, chief executive, Jersey Finance, said:
“Whilst specific in nature, the feeling amongst private wealth industry professionals in Jersey is that the changes contained in Amendment No.5 will make Jersey a significantly more attractive destination overall for private client business. The international private wealth management industry is constantly evolving, and clarity and certainty are absolutely vital, so it is important that we continue to evolve our trust framework and ensure that our legislation is as robust as possible.
“Jersey is a world leader in the trust industry, ranked tenth and higher than any other offshore centre in the Global Financial Centres Index for private banking and wealth management. Its original trust legislation has been widely copied by other jurisdictions since it was introduced in 1984 and these latest amendments will build on that reputation to ensure that Jersey maintains its status as one of the most highly respected trust jurisdictions globally.”