Trust LAW

Jurisdiction Comparison

INSURANCE INVESTMENT FUNDS TRUST & COMPANY PENSIONS INVESTMENT BANKING

MANAGEMENT
Trust law
GUERNSEY JERSEY BRITISH VIRGIN ISLANDS CAYMAN ISLANDS
Principal legislation • The Trusts (Guernsey) • Trusts (Jersey) Law • Trustee Act (as • Trusts Law
Law, 2007 (the ‘Trusts 1984 (as amended in amended in 1993, (2017 Revision)
(Guernsey) Law’) 1989, 1991, 1996, 2006, 2003 and 2013) • Fraudulent Dispositions
• The Public Trustee 2012 and 2013 (the • Virgin Islands Law (1996 Revision)
(Bailiwick of Guernsey) ‘Trusts (Jersey) Law’) Special Trusts Act, • Perpetuities Law
Law, 2002 2003 (‘VISTA’) (1999 Revision)
• Recognition of Trusts • Banks and Trust
Act (Overseas Territories) Companies Law
Order 1987 (2013 Revision)
• Trustees’ Relief Act

Application to Guernsey’s trust law
principles of English is a non-codified
common law and equity statutory framework.
Where the Guernsey
statutory provisions are
silent, or the issue is
absent in customary law,
the Guernsey courts will
look to English and other
Commonwealth authorities
for guidance.
Not directly, but many Yes, subject to modification Yes, subject to modification
of these principles are by a BVI statute. by Cayman Islands statute.
reflected by Jersey statute
and in Jersey customary
law. Where the statutory
provisions are silent or
the issue is absent in
customary law, the courts
look to English and other
Commonwealth cases
for guidance.

2 Trust Law - Jurisdiction Comparison

 GUERNSEY
Status of the Guernsey is a UK Crown
jurisdiction and Dependency which is self-
court system governing and part of the
Commonwealth. The Head
of State is HM the Queen
of England and the Crown
is responsible for the
appointment of Guernsey’s
Lieutenant Governor and
the senior members of the
judiciary such as the Bailiff
and Deputy Bailiff.
Guernsey has its own
independent court system.
The Privy Council in
London is the final court
of appeal.
Government regulatory None (except in the case of
approvals certain unit trusts).
Government fees None.
JERSEY
Jersey is a UK Crown
Dependency which is self-
governing and part of the
Commonwealth. The Head
of State is HM the Queen
of England and the Crown
is responsible for the
appointment of Jersey’s
Lieutenant Governor and
the senior members of the
judiciary such as the Bailiff
and Deputy Bailiff.
Jersey has its own
independent court system.
The Privy Council in
London is the final court
of appeal.
None (except in the case of
certain unit trusts).
None.
BRITISH VIRGIN ISLANDS
The BVI is a British
Overseas Territory which
is self-governing and part
of the Commonwealth. The
Head of State is HM the
Queen of England and
the UK is responsible for
the appointment of the
BVI’s Governor, external
affairs, internal security
and the administration
of the courts.
The BVI is part of the
Eastern Caribbean Court
system, which was founded
in 1967.
The Privy Council in
London is the final court
of appeal.
None (except in the case of
certain unit trusts).
None.
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CAYMAN ISLANDS
The Cayman Islands is a
British Overseas Territory
which is self-governing and
part of the Commonwealth.
The Head of State is HM
the Queen of England and
the UK is responsible for
the appointment of the
Cayman Islands’ Governor,
national security and
the administration
of the courts.
The Cayman Islands has
its own independent court
system.
The Privy Council in
London is the final court
of appeal.
None (except in the case of
certain unit trusts).
None (except CI$500
per annum if voluntarily
registered as an exempted
trust and in the case of
certain unit trusts).
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 GUERNSEY
Types of trust • Discretionary trust
• Life interest trust
• Resulting, implied and • Purpose trusts • Charitable • Charitable
constructive trusts
• Purpose trusts non-charitable)
(both charitable and • Bare trust purpose trust • Bare trust
non-charitable)
• Bare trust
• Unit trust
• Pension trust
• Employee benefit trust
Reserved powers The Trusts (Guernsey) Law
permits settlor-reserved
powers trusts.
Timing A typical Guernsey
discretionary trust
is capable of being
established in a quick
timescale, provided
the trustee has the
requisite customer
due diligence (CDD)
to satisfy the trustees’
aniti-money laundering
(AML) obligations.
Other types of trusts
such as pension trusts
(which require income tax
approvals) may take longer.
4 Trust Law - Jurisdiction Comparison
JERSEY
• Discretionary trust
• Life interest trust
(both charitable and purpose trust
(nomineeship)
• Unit trust
• Pension trust
• Employee benefit trust
Most of the above forms
of trust can be set up
as a settlor-reserved
power trust or an asset
protection trust.
A Jersey trust is capable
of being established
within a few days,
assuming that AML
requirements are satisfied.
BRITISH VIRGIN ISLANDS
• Discretionary trust
• Life interest trust
• Non-charitable • STAR trust
• Bare trust (nomineeship)
(nomineeship)
• Unit trust
• Pension trust
• Employee benefit trust
Most of the above forms
of trust can be set up as
a VISTA trust or as settlor-
reserved power trust.
A BVI trust is capable of
being established within
a few days, assuming
that AML requirements
are satisfied.
CAYMAN ISLANDS
• Discretionary trust
• Life interest trust
purpose trust
• Unit trust
• Pension trust
• Employee benefit trust
• Exempted trust
Most of the above
forms of trust can be
set up as a settlor
reserved power trust or
an asset protection trust.
A Cayman Islands trust
is capable of being
established within a few
days, assuming that AML
requirements are satisfied.
 GUERNSEY JERSEY BRITISH VIRGIN ISLANDS CAYMAN ISLANDS
Trust duty None. None. Trust duty of US$100 is Stamp duty of CI$40 on
payable on settlements settlement and declaration
and declarations of trust of trust, but confidentiality
by affixing revenue stamps is maintained since the
to the document which payment of duty does not
must be cancelled by involve the submission
an ‘authorised person’ of the document to the
(which includes the Cayman Islands authorities.
settlor, a trustee or a BVI
lawyer), but confidentiality
is maintained since the
payment of the duty does
not involve the submission
of the document to the
BVI authorities.

Bare trusts and charitable

trusts are exempt.

Requirements for None (except in the case None (except in the case None. None (except in the case of
trust to have local of certain unit trusts). of certain unit trusts). certain unit trusts).
assets or to be
administered locally

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 GUERNSEY
Filing requirements Except in the case
and confidentiality of certain unit trusts
that are regulated as
collective investment
schemes by the Guernsey
Financial Services
Commission (GFSC)
under the Protection
of Investors (Bailiwick
of Guernsey) Law, 1987
(as amended) (the ‘POI
Law’), there are no public
filing requirements for
trusts in Guernsey and
trust instruments are
confidential documents.
Taxation There are no capital
gains or inheritance
taxes in Guernsey.
Income tax is chargeable
on persons who are
resident or ordinarily
resident in Guernsey.
In the context of a
discretionary trust where
a non-Guernsey resident
settles a trust in Guernsey,
then non-Guernsey
resident beneficiaries are
not subject to Guernsey
income tax. This exemption
is automatic.
6 Company
Trust Law Law
- Jurisdiction
- Jurisdiction
Comparison
Comparison
JERSEY
Subject to special
requirements for certain
types of unit trusts that
are regulated by the
Borrowing (Jersey) Law
1947 or the Collective
Investment Funds (Jersey)
Law 1988 (as amended)
and thus need to be
registered in accordance
with the requirements
of those laws, there
are no public filing
requirements for trusts
and trust instruments are
confidential documents.
There are no capital or
inheritance taxes in Jersey.
Income tax is chargeable
on persons who are
resident or ordinarily
resident in Jersey.
In the normal trust
situation, ie with settlor, life
tenants and beneficiaries all
being non-Jersey resident,
full exemption from Jersey
taxation is given to foreign
income and Jersey bank
interest, by concession.
This exemption is
automatic and does not
need to be applied for.
BRITISH VIRGIN ISLANDS
Except in the rare case
of certain unit trusts
that are ‘public funds’
and thus need to be
registered in accordance
with the requirements
of the Mutual Funds
Act 1996 (as amended),
there are no public filing
requirements for trusts
and trust instruments are
confidential documents.
Income tax is zero-rated in
the BVI and there are no
capital or inheritance taxes.
Specific exemptions from
taxation are also contained
in the Trustee Act.
CAYMAN ISLANDS
Except in the case of certain
unit trusts that are regulated
mutual funds under the
Mutual Funds Law (2015
Revision) and in the case of
exempted trusts (in respect
of which documents lodged
are not available for public
inspection), there are no
public filing requirements for
trusts and trust instruments
are confidential documents.
No taxes in the nature of
income tax, corporation
tax, capital gains tax nor
inheritance tax are payable
in the Cayman Islands.
If a Cayman Islands trust is
registered as an exempted
trust, the trustee is entitled
to apply for an undertaking
from the Governor of the
Cayman Islands that it will
be exempt from local tax (if
any should be introduced)
for up to 50 years.
 GUERNSEY JERSEY BRITISH VIRGIN ISLANDS CAYMAN ISLANDS
Trustees

Minimum is two unless: one Minimum of one trustee Minimum of one trustee Minimum of one trustee
was originally appointed; (corporate or individual). (corporate or individual). (corporate or individual).
or a corporate trustee is Subject to special Subject to special Subject to special
appointed to act; or the requirements for certain requirements for VISTA requirements for STAR
trust instrument permits types of unit trusts, which and non-charitable purpose trusts and certain types
just one. are regulated by the trusts, trustees can be of unit trusts, which
Any Guernsey resident Control of Borrowing licensed BVI professional are licensed mutual
trustees must be licensed (Jersey) Law 1947 or the trustees, BVI exempt funds, trustees can be
fiduciaries or personal Collective Investment private trust companies, licensed Cayman Islands
fiduciary licence holders Funds (Jersey) Law 1998 foreign corporate professional trustees,
under the Fiduciaries (as amended), trustees trustees or individuals Cayman Islands private
Law in order to act as can be licensed Jersey (wherever resident). trust companies,
professional trustees to professional trustees, foreign corporate
Guernsey trusts (and any Jersey private trust trustees or individuals
overseas trusts). companies or foundations, (wherever resident).
Unit trusts, which are foreign corporate
collective investment trustees or individuals
schemes under the POI (wherever resident).
Law, generally require
a trustee licensed to
provide custodial services
to collective investment
schemes under the
POI Law.

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 GUERNSEY JERSEY BRITISH VIRGIN ISLANDS CAYMAN ISLANDS
Private trust Yes. In Guernsey, a private Yes. Under the Financial Yes. Under The Financial Yes. Under the Banks and
companies permitted trust company acting Services (Trust Company Services (Exemptions) Trust Companies Law
as trustee is treated as Business (Exemptions)) Regulations 2007. (2013 Revision) and the
a regulated activity and (Jersey) Order 2000. Private Trust Company
as such, a full fiduciary (Amendment) Regulations
licence is required if a (2011 and 2013).
trustee derives any income,
fee, emolument or other
consideration in money
or money’s worth for
providing the service.
Discretionary exemptions
from licensing are available
subject to the discretion
of the GFSC provided that
certain criteria are met.

Regulations of Yes. By the GFSC. Yes. By the Jersey Financial Yes. By the BVI Financial Yes. By the Cayman Islands
professional trustees Services Commission. Services Commission. Monetary Authority.

Protectors permitted Yes. Yes. Yes. This is made clear by Yes.

BVI statute.

8 Trust Law - Jurisdiction Comparison

 GUERNSEY
Application of the
relevant provisions ✔ ✔
of the Hague Trusts
Convention The provisions of the
Hague Trusts Convention
have been extended
to Guernsey.
Anti-forced heirship The Trusts (Guernsey)
provisions and Law contains robust,
provisions preventing comprehensive and
judgements based on carefully crafted provisions
such provisions from designed to protect
Guernsey trusts from
being enforced
forced heirship claims.
against trusts
JERSEY
The provisions of the
Hague Trusts Convention
have been extended to
Jersey and many of these
are reinforced by the Trusts
(Jersey) Law.
The Trusts (Jersey) Law
now contains robust,
comprehensive and
carefully crafted provisions
protecting most Jersey
trusts (and dispositions
to their trustees) from
‘forced heirship’ claims.
These also prevent foreign
judgments based on
such claims from being
recognised or enforced in
Jersey. These provisions
may not apply to trusts set
up by Jersey domiciliaries,
although this is currently
under review and the
restriction is likely to
be removed.
BRITISH VIRGIN ISLANDS
✔ ✘
Most of the provisions
of the Hague Trusts
Convention have been
extended to the BVI
by statutory instrument
and many of these are
reinforced by BVI statutory
provisions dealing with
conflict of laws.
The Trustee Act contains
robust, comprehensive and
carefully crafted provisions
protecting most BVI trusts
(and dispositions to their
trustees) from ‘forced
heirship’ claims. These also
prevent foreign judgments
based on such claims
from being recognised or
enforced in the BVI.
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CAYMAN ISLANDS
The Hague Trusts
Conventions has not
been extended to the
Cayman Islands.
The Trusts Law (2017
Revision) contains
robust, comprehensive
and carefully crafted
provisions protecting
most Cayman Islands
trusts (and dispositions
to their trustees) from
‘forced heirship’ claims.
These also prevent foreign
judgments based on
such claims from being
recognised or enforced in
the Cayman Islands.
9
 GUERNSEY JERSEY
Non-charitable purpose Yes, non-charitable Yes, by reason of Article
trusts permitted purposes trusts are 12 of the Trusts (Jersey)
permitted in Guernsey Law provided that the
provided the relevant trust instrument provides
requirements of the for the appointment of an
Trust (Guernsey) Enforcer to enforce the
Law are met and an trust in relation to its non-
Enforcer is appointed charitable purposes.
in relation to the non- The purposes may be
charitable purposes. of any number or kind,
whether charitable or non-
charitable, as long as the
purposes are lawful, not
contrary to public policy or
so uncertain as to render
performance impossible.
10 Trust Law - Jurisdiction Comparison
BRITISH VIRGIN ISLANDS CAYMAN ISLANDS
Yes, provided, inter Yes, under the Special
alia, that the purpose is Trust Alternative Regime,
specific, reasonable and commonly referred to
possible, at least one as the STAR law, set out
trustee is a ‘designated in Part VIII of The Trusts
trustee’ (such as a BVI Law (2017 Revision). The
licensed trustee or objects of a STAR trust or
registered private trust power may be persons or
company) and an Enforcer purposes or both.
is appointed. The persons or purposes
may be of any number or
kind, whether charitable
or non-charitable, as long
as the purposes are lawful
and not contrary to
public policy.
 GUERNSEY
Settlor reserved power Pursuant to section 15 of
trusts permitted the Trust (Guernsey) Law,
a settlor of a Guernsey
trust can reserve certain
powers without invalidating
the trust.
These powers include
but are not limited to
the following: powers of
amendment, appointment
of trustees, removal of
investment manager,
the power to change
the proper law and the
power to restrict the
trustee’s function.
JERSEY
Yes. Article 9A of the Trusts
(Jersey) Law specifically
provides that a wide range
of powers can be reserved
by the settlor of a trust or
granted to others without
invalidating the trust.
BRITISH VIRGIN ISLANDS CAYMAN ISLANDS
Yes. These are permitted Yes. The Trusts Law (2017
as a result of section 86 Revision) specifically
of the Trustee Act and provides that a wide range
VISTA trusts are also of powers can be reserved
frequently set up to by the settlor of a trust or
reserve managerial/ granted to others without
administrative/investment invalidating the trust.
powers to the settlor
as director of an
underlying company.
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 GUERNSEY
Special legislative
provisions designed ✘ ✘
to protect trusts and
transfers to their No. Specific legislation
trustees from exists in Guernsey to
protect trusts but the
creditors’ claims
firewall provisions
expressed in the Trust
(Guernsey) Law are
designed to ensure that
Guernsey law only applies
to Guernsey trusts to avoid
the application of foreign
law or enforcement of
foreign judgments. The
‘Pauline Action’ is available
in Guernsey.
Special legislative
provisions designed ✔ ✔
to protect third parties
such as lenders who Yes. By reason of section
deal with trustees 42 of the Trust (Guernsey)
Law, trustees will incur
personal liability if they
fail to disclose to a third
party (with whom they are
transacting) that the trustee
is acting in such a capacity.
In other cases, the lender
has recourse to the
trust fund.
12 Trust Law - Jurisdiction Comparison
JERSEY
No, although the ‘firewall’
provisions in the Trusts
(Jersey) Law would
probably prevent the
application of non-Jersey
principles and so any such
claims would likely be
subject to a ‘Pauline Action’
under Jersey law.
Yes. Provisions which relate
to trustees that deal with
third parties are contained
in the Trusts (Jersey) Law
and provide that persons
paying or lending money
to trustees need not
consider the propriety
of the transaction or the
application of the money.
BRITISH VIRGIN ISLANDS
✘ ✔
No. Such claims would likely
be subject to the English
Statute of Elizabeth.
✔ ✘
Yes. Fairly sophisticated
provisions which relate to
trustees that deal with third
parties are contained in the
Trustee Act. Some of these
provisions will only apply
if the trust instrument
so specifies.
CAYMAN ISLANDS
Yes. Under the Fraudulent
Dispositions Law (1996
Revision) a disposition
made at an undervalue
(such as a disposition to
trustees) is only subject to
the claims of a creditor if the
creditor can show an intent
to wilfully defraud and then
only for up to six years from
the date of transfer.
No but, following English
principles, a third party
may have recourse to
the trust fund by way
of ‘subrogation’ to
the trustee’s right to
reimbursement (where
such right exists).
 GUERNSEY JERSEY BRITISH VIRGIN ISLANDS CAYMAN ISLANDS
Special legislative Trust assets can include No. But Jersey trusts VISTA sets up a special No, but Cayman Islands
provisions specially shareholdings in commonly include an alternative trust regime to trusts commonly include
designed to cater for controlled companies ‘anti-Bartlett’ provision cater for the succession an ‘anti-Bartlett’ provision.
situations in which and an ‘anti-Bartlett’ and purpose trusts can to shares in controlled STAR trusts can be
trust assets comprised clause can be used, be established with a companies, so that established with a
which means the trustee purpose specifically these can be run by purpose to specifically
shareholdings in
is unable to intervene to hold the shares of a their directors free from hold the shares of
controlled companies in the management of controlled company with trustee intervention a controlled company
that company. no obligation on the part of and the trustee will be with no obligation
the trustees to intervene in exonerated from liability on the part of the
its management. for the consequences trustees to intervene
of not intervening e.g. in in its management.
investment decisions.

Perpetuity period for Guernsey trusts may exist Jersey trusts may 360 years, plus a ‘wait
beneficiary trusts in perpetuity. exist in perpetuity. and see’ rule whereby a
disposition or power will
only fail when it actually
takes effect outside the
perpetuity period.
A trust that benefits
persons can now be set
up as non-charitable
purpose trust which
may exist in perpetuity.
150 years, plus a ‘wait
and see’ rule whereby a
disposition or power will
only fail when it actually
takes effect outside the
perpetuity period.
Exception for STAR
trusts which may exist
in perpetuity.

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 GUERNSEY JERSEY BRITISH VIRGIN ISLANDS CAYMAN ISLANDS
Other features of • Clear provisions as • Clear provisions as to the • Clear provisions as to • Provisions enabling
the jurisdiction’s to the circumstances circumstances under the circumstances under trusts to be registered as
trust laws under which the courts of which the courts of which the courts of BVI exempted trusts and for
Guernsey have jurisdiction Jersey have jurisdictions have jurisdictions trust documents to be
over trusts and the over trusts. over trusts. lodged with the Registrar
powers the court • Provisions extending • Provisions relating to of Trusts.
have to intervene. the circumstances in the construction of
• Definitive statutory which the court may express powers to
powers and duties of vary trusts on behalf vary trusts. Provisions
trustees and the position of minor, unborn or extending the
of outgoing trustees unascertained circumstances in
• The Court may approve beneficiaries. which the court may
variations to Guernsey • Cy-près type provisions vary trusts on behalf
trusts in various relating to both charitable of minor, unborn or
circumstances, such and non-charitable unascertained
as where unascertained purpose trusts. beneficiaries and
persons become entitled provisions enabling trust
• Provisions relating
to an interest under a instruments to appoint
to the standard of
Guernsey Trust. persons to approve
trustees’ duties.
such variations.
• Clear provisions in the • Provisions relating to the
position of the Guernsey • Cy-près provisions
delegation of the trustees’
Court to provide duties to managers and Provisions relating to
directions to a trustee other professional advisers. ‘illusory appointments’.
as to how a trustee should Provisions enabling
• Specific provisions
act in the affairs of a trust. managing trustees
enabling a trustee to
• Cy-près type provisions contract with itself in to be appointed.
in the Trusts (Guernsey) respect of different trusts.
Law in respect of both
trust property held
for charitable and non-
charitable purposes.
• The office of the
Guernsey Public Trustee
has powers to act
as trustee of a Guernsey
law governed trust in
certain circumstances.

14 Company
Trust Law Law
- Jurisdiction
- Jurisdiction
Comparison
Comparison
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