Our private client and trusts lawyers in Guernsey, Isle of Man and Jersey outline some of the key similarities and differences in trusts law across the three jurisdictions. Appleby is unique in that it is the only offshore law firm to advise on the laws of all three Crown Dependencies. Please note this is only a high level summary of the trusts law in Guernsey, Isle of Man and Jersey and specialist legal advice should be sought.
The trust laws of Guernsey, Isle of Man and Jersey permit trusts of unlimited duration (except for non-charitable purpose trusts in the Isle of Man having a maximum duration of 80 years).
TRUSTS FOR NON-CHARITABLE PURPOSES
All three jurisdictions by their respective statutes have enabled trusts for non-charitable purposes.
The Isle of Man requires two local trustees for a non-charitable purpose trust. As noted above, an Isle of Man non-charitable purpose trust can last for a maximum period of 80 years.
Jersey and Guernsey do not require a local trustee or a minimum number of trustees.
In all three islands an “enforcer” is required to enforce the trust’s non-charitable purposes.
SETTLOR RESERVED POWERS
In Jersey and Guernsey, there is an express statutory ability for a settlor to reserve, or confer on another, certain powers which are set out in the law.
The Isle of Man does not have express reserved powers in statute. However, under general trust law principles, it is possible for the settlor to reserve a range of powers and functions by express reference in the trust instrument.
RIGHTS TO INFORMATION
In Guernsey, beneficiaries are entitled to information as to the state and amount of trust property. This can be excluded by the terms of the trust but the beneficiaries will still have the right to apply to court for an order requiring provision of such information.
In Jersey, the terms of a trust can restrict a beneficiary’s right to information and a trustee may refuse a request for disclosure where it is satisfied that it would not be for the benefit of one or more of the beneficiaries, or the beneficiaries as a whole, to make such disclosure. The court retains ultimate power regarding disclosure, so that it can overrule the trustee’s decision and override the terms of the trust concerning disclosure, either in relation to a particular instance or more generally.
In the Isle of Man, the amendments proposed by the Trust and Trustees Bill 2022 include a codification of the position set out in the Manx case of Schmidt v Rosewood and provides clarity as to who may apply for trust information, and when (and in relation to what circumstances) a trustee may refuse to provide trustee information.
All of the Crown Dependencies have enacted “firewall” provisions in their respective laws which seek to ensure that, as far as possible, a trust is shielded against attack by any party (including a court in an overseas jurisdiction) on the grounds that the trust offends or denies rights arising under foreign law – typically, rights of inheritance (such as forced heirship rights) or rights arising through marriage or former marriage.
Jersey and Guernsey laws do not include any express provisions relating to protectors. Protectors are permitted by virtue of common law and provisions relating to the appointment, retirement and powers of a protector (if required) need to be contained within the trust instrument.
Isle of Man law defines a protector and the amendments proposed by the Trust and Trustees Bill 2022 include several references to protectors (e.g. in relation to the disclosure of trust information). As under Jersey and Guernsey law, provisions relating to the appointment, retirement and powers of a protector (if required) need to be contained within the trust instrument.
LIMIT ON TRUSTEE’S EXONERATION
Jersey and Guernsey’s respective laws state that nothing in the terms of a trust shall relieve, release or exonerate a trustee from liability for breach of trust arising from the trustee’s own fraud, wilful misconduct or gross negligence.
In the Isle of Man, the terms of a trust may (but do not have to) exonerate a trustee from liability for gross negligence.
Guernsey is one of the few jurisdictions which has incorporated in its legislation how alternative dispute resolution processes may interact with trusts. If permitted or directed by the terms of the trust instrument, or if authorised by the court, disputes between trustees and beneficiaries may be referred to arbitration or mediation and, if resolved by such means, will bind all beneficiaries provided they were represented.