Jersey Trusts:

Local Trusts:

Although Jersey law has its roots in the Norman law (a 'Roman' or 'Civil' law code), the Trusts (Jersey) Law 1984 codified an entirely 'Anglo-Saxon' body of trust law, resolving many uncertainties and increasing protection for beneficiaries. Subsequent amendments included the recognition of 'purpose' trusts in 1996 (the normal form of Jersey trusts is 'discretionary'). This has led to an increase in corporate use of Jersey trusts.

The most significant amendment to the 1984 law came into force on October 27, 2006. This introduced settlor-reserved powers, which 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 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 will not be affected by any rights conferred on anyone under a foreign law, and a proposal that will remove the existing automatic ‘personal guarantor’ provisions for directors of corporate trustees, thereby making it more attractive to establish private trust companies in Jersey.

Jersey is a party to the Hague Convention on the Law Applicable to Trusts and Their Recognition. Jersey trust law explicitly excludes foreign inheritance laws and does not recognize foreign judgements. The creation of a trust is free from Government duty and there are no registration or audit requirements as such in Jersey, although the tax authorities of beneficiaries' jurisdictions (eg the UK) may require annual reports.

Jersey trusts may 'migrate' to other jurisdictions by changing trustees and the applicable law of a trust; likewise, foreign trusts may migrate to Jersey. A Jersey trust is governed by the law of Jersey. In the case where the beneficiaries of a Jersey trust are non resident, income arising from sources outside Jersey is not liable to income tax in Jersey, nor are distributions to the beneficiaries. Interest on bank deposits made by the trustees of a nonresident trust is not taxed because of a government concession. The trustees of a non resident trust are not required to make returns or provide accounts of the trust to the Comptroller of income tax. Trust accounts must be kept but do not require auditing.

Unit Trusts:

There are no special provision in Jersey law covering Unit Trusts, which are therefore treated in the same way as ordinary Jersey trusts, and have the same tax regime.

Version date: 07.05.06