Trusts (Jersey) Amendment Law 2026

Executive summary of principal areas of amendment

The Trusts Amendment clarifies and confirms the following:

1. Priority of Secured Claims: the interests of a lender, secured over trust assets, takes priority over the equitable lien of a current or former trustee arising by operation of law, unless the lender agrees otherwise.
2. Reasonable Security and Equitable Lien: a trustee’s equitable lien can be disregarded when considering the appropriateness of taking reasonable security (of whatever nature) or the adequacy of such reasonable security.
3. Saunders v Vautier Termination: beneficiaries cannot unilaterally terminate a trust if there is any power resulting in the addition of beneficiaries or if the terms of the trust provide for the disposition of trust property for a charitable or non-charitable purpose; ensuring the intentions of the settlor are given due regard.
4. Sole Trustee’s Resignation: a sole trustee’s resignation from office will have no effect if no trustee remains in office.
5. Corporate Trustees: a Jersey limited liability company (LLC) or certain partnerships or other entities with legal personality can act as corporate trustees of a Jersey trust.

Amendments in more depth

• Confirmation of priority of claims between a former and current trustee and a secured creditor

In Equity Trust (Jersey) Limited v Halabi (as Executor) [2022 UKPC 36], the Privy Council sitting as Jersey’s highest appellant court, considered the correct method of dealing with the assets of an “insolvent trust”. The Privy Council held that a trustee’s right to be indemnified out of trust assets confers a proprietary interest, which operates as an equitable lien.  The key rulings in the judgment were that:

(a)      the proprietary interest (equitable lien) survives the transfer of trust assets to a successor trustee;

(b)      the claims of successive trustees for indemnity rank pari passu (equally) with one another, rejecting the “first in time” rule that had been applied by the Jersey Court of Appeal; and

(c)      the equitable lien takes priority over the claims of the trust’s beneficiaries and creditors.

However, the Privy Council did not definitively determine how a trustee’s equitable lien ranks vis-à-vis claims of an external secured creditor and there has been no further decision in the Jersey Courts regarding the enforceability of provisions that purport to subordinate such lien by a trustee.  Hence, Article 43A of the Trusts Law (Article 43A) will now confirm that the interests of a lender, secured over trust assets, takes priority over the equitable lien of a current or former trustee arising by operation of law, unless the lender agrees otherwise. It will be immaterial whether the interest is granted or created under Jersey law or another jurisdiction. This is considered to reflect what most trustees and lenders would expect to be the situation.

The amendment to Article 43A is important in relation to the equitable lien of a former trustee. A lender can mitigate the risk of an equitable lien of the current trustee by inserting waivers in finance documents.  However, a former trustee will not be party to such documents and would need to waive their equitable lien separately. Hence, the Article 43A amendment provides clarity in law that the lender’s position takes priority over the current or former trustees equitable lien. It will not affect the nature of or other rights arising from the respective lien or security, nor does it alter the nature of the trustee lien or prevent a trustee, where appropriate, taking actual security over trust assets.

Those trustees with existing or intended secured lending should consider reviewing their financing documents to understand any change in their position in relation to a secured lender.

• Reasonable Security and Equitable Lien

A new Article 43A(1) is introduced into the Trusts Law and confirms that, when considering the right of a trustee to be provided with reasonable security upon leaving office for its liabilities as set out in Article 43A(1), no account is to be taken of any lien arising by operation of law in that consideration. Hence, when considering the appropriateness of taking reasonable security (of whatever nature) or the adequacy of such reasonable security under Article 43(1) of the Trusts Law, whether or not there is a lien or its nature or extent can be disregarded by the trustee.

•  Termination of a trust by beneficiaries

Article 43(3) of the Trusts Law reflects the rule in the English case of Saunders v Vautier [1841] and provides that: “where all the beneficiaries are in existence and have been ascertained and none are interdicts or minors they may require the trustee to terminate the trust and distribute the trust property among them.” (Article 43(3)).

The received interpretation of beneficiaries’ ability to call for a trust’s termination under Article 43(3) was called into question following the Guernsey case of Rusnano Capital AG (in liquidation) v (1) Molard International (PTC) Limited and (2) Pullborough International Corp [2019] (Rusnano) (both at first instance and on appeal). The provisions of Article 43(3) are in similar terms to the provisions of Section 53(3) of the Trusts Guernsey Law, 2007 which were under consideration by the Guernsey courts. Whilst Rusnano is not binding on Jersey courts, it is possible that a Jersey court would give weight to the conclusions reached in Rusnano. The prevailing view has been that the existence of a power to add beneficiaries is sufficient to prevent termination of a trust; the Guernsey court did not consider this to be the case.

Therefore, Article 43(3) is amended to avoid any unnecessary costs and delays in having to seek a court determination on this question. Article 43(3) makes it clear that if there are other persons who could become beneficiaries in accordance with the terms of, or pursuant to the exercise of any power under the trust, or if the terms of the trust currently provide for the disposition of trust property for a charitable or non-charitable purpose, the beneficiaries cannot exercise the power to call for the termination of the trust; ensuring the intentions of the settlor are given due regard.

A beneficiary retains the ability to seek directions from the Royal Court and a trustee can release its powers to permit the beneficiaries to terminate or itself terminate the trust if it considers it is in the interests of the beneficiaries.

• Resignation of a sole trustee

A new Article 19(3A) is inserted into the Trusts Law to clarify the current position that the resignation of a sole trustee does not have effect as it would mean there is no trustee in office thereafter. Article 19(3) of the Trusts Law provides that “if two or more trustees purport to resign simultaneously, the effect of which would mean that there be no trustee, such resignations shall have no effect”.  The new article 19(3A) provides: “If a sole trustee purports to resign, the effect of which would mean that there would be no trustee, the resignation has no effect.” This will avoid any confusion, particularly for lay trustees.

• Corporate Trustees

The definition of “corporation” under Article 1 of the Trusts Law is amended to mean: “a body corporate wherever incorporated or other person having legal personality wherever registered or established”. This clarifies that a Jersey limited liability company (LLC) or certain partnerships or other entities with legal personality can act as corporate trustees of a Jersey trust.  For this purpose, minor consequential amendments are made to Articles 9(2A)(d) and 9A9(2)(c) to address the new definition of “corporation”.

Article 28 of the Trusts Law permits a corporate trustee to act in connection with a trust by resolution and by such resolution appoint officers or employees to act on its behalf in connection with the trust. Article 28 is renumbered as Article 28(1) and a new article 28(2) is introduced to recognise that a corporate trustee may not be a company but another type of entity. Hence, a reference to a resolution within Article 28 of the Trusts Law is to be read as the equivalent decision-making process for the relevant corporate trustee entity.

Minor amendments

The Trusts Amendment makes two minor amendments as follows:

• Article 43(5) of the Trust Law, relating to the definition of “liabilities” only within Article 43 and the termination of a Jersey trust, is deleted.  It referenced Article 43(2) which was substituted in 2018 when Article 43A relating to security of a trustee was introduced. Hence the definition became defunct.
• Article 55 of the Trusts Law, relating to the protection of persons dealing with trustees, deletes the word “actual” in relation to the level of notice required by a bona fide purchaser for value.  This amendment standardises all references to notice in the Trusts Law so that an honest and reasonable purchaser is expected to make inquires if there is something to put him or her on inquiry.

Conclusion

The Trusts Amendment is about clarity and confirmation to reflect industry practice. It is not about fundamental change. The Trusts Law, together with its supporting case law, is highly regarded internationally as well as locally. It is not, and was not intended to be, a codification of the law of trusts in Jersey but a statutory framework, allowing flexibility and helping keep Jersey at the forefront of the trusts industry across the world.

Please do get in touch with your usual Appleby contact for more information.