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3 February 2017
On 11 April 2016, the Government of Jersey published a Consultation Paper concerning proposed amendments to the Trust (Jersey) Law 1984, and invited discussion. The consultation period closed on the 4 July 2016.
Given the feedback provided by industry, the Government of Jersey released a policy document outlining its desired direction on 11 January 2017. The following points provide an overview of the given intended direction:
- The reworking of Article 29, dealing with the provision of information to Beneficiaries. Here, the Government intends to amend Article 29 to remove the double negative and to reflect the current case law in that a Beneficiary’s right to information is always subject to the overarching discretion of the court. It is also recognised that the Trustee should have flexibility to apply discretion to refuse disclosure if it is considered to be in the best interests of the Beneficiaries. The Beneficiaries do have the rite to apply to the Royal Court for disclosure if he or she considers the level of information provided to be insufficient.
- The Government intends to provide clarification of certain of the provisions relating to the reservation of powers by a Settlor (what power or influence the Settlor is permitted over the management of the trust). There were many amendments originally suggested under this subject heading, many towards clearer definitions which were, in general, accepted, whilst some more conceptual Government suggestions, such as that regarding the nature of Trustee duties, were retracted given strong industry responses countering the proposals. Ambiguity regarding the personal or fiduciary nature of reserved powers was also flagged by industry.
- The Government intends to extend the indemnity provisions in Article 34 to cover lifetime distributions, to enable individual officers and employees to benefit from the indemnities, and to permit them to directly enforce them in certain circumstances.
- The Government intends to widen the options with regards to accumulation and distribution of trust income, with the default position being the retention of income in its character (type) of income. In this instance, the Government intends to make the proposed amendments but does not propose to give them retrospective effect.
- With regards to presumption of lifetime effect, the Government intends to introduce wording to confirm a presumption that unless it is specified otherwise, a trust will take immediate effect on the property vesting in the Trustee (what the Trustee has responsibility for).
- With regards to the Power of the court to vary (change) a trust, the Government intend to limit the widening of the power of the court to vary a trust where it is not possible to find or consult all adult beneficiaries.
Although the main implications of the review and intended changes are outlined above, by no means is the overview exhaustive. Due to the degree of variability of trust structures, certain legislative amendments will have greater impact on some Settlors, Trustees and Beneficiaries than on others. Accordingly, skilled council and knowledgeable and experienced Trustees (those who have a greater understanding of the evolving regulatory landscape, and their clients’ circumstances and needs), will provide for much added value.