Proposed Amendments To The Trusts (Jersey) Law 1984: A Commentary

The States of Jersey's Chief Minister's Department recently issued a consultation paper on a proposed 7th amendment to the Trusts (Jersey) Law 1984. The consultation paper canvassed views on whether to amend the Trusts (Jersey) Law 1984 in twelve areas in which there were perceived either to be difficulties with the current legislation or where it was thought improvements could be made.

The areas for which views were sought and to which Baker & Partners responded are:

Area 1 - the certainty of objects - specifically whether there needs to be a beneficiary or purpose for whom the trust property is to be managed and applied at all times during the existence of a trust.

Area 2 - The rights of beneficiaries to information from the trustee

Area 3 - The reservation of powers by a settlor or third party

Area 4 - The arbitration of trust disputes in Jersey

Area 5 - The extension of the statutory provisions for trustees to self-contract

Area 7 - Extension of the trustee's indemnity provisions

Area 9 - Introducing an express presumption of lifetime effect for Jersey trusts

Area 10 - The powers of the court to effect a variation of Jersey trusts

Area 11 - The application of Jersey's forced heirship regime (légitime) to trusts

Area 1 - The need for a beneficiary at all times during the existence of a trust

The consultation paper identifies the impetus for change as the apparently damaging uncertainty in the law about the circumstances in which a Jersey trust is valid. In our view, there is no such uncertainty though: the circumstance in which a Jersey trust is valid for certainty of objects is, and has been for many years, settled and certain. It is not necessary for the beneficiaries of a trust to be in existence at the time of the trust's creation, provided they become ascertainable at some point during the trust period.

Article 10(1) and (2) Trusts (Jersey) Law 1984 is a confusingly worded provision, which could be revised to be made clearer. It states that beneficiaries of a trust shall be (a) identifiable by name; or (b) ascertainable by reference to (i) a class, or (ii) a relationship to some person whether or not living at the time of the creation of the trust or at the time which under the terms of the trust is the time by reference to which members of a class are to be determined.

The principle of the certainty of objects, which any legislative amendment should reflect, is concerned with whether the object (i.e. the beneficiary or purpose) for whom the trust property is held is ascertainable: this is different to the beneficiary being 'living' or having 'a relationship to someone else, living or dead'. Objects are ascertainable by reference to their specific description or identity or by reference to a conceptually certain class during the trust period.

The issue that arose from Re the Exeter Settlement [2010] JRC 012 and Harper v Apex Trust Company Limited [2014] JRC 253 cases, cited in the consultation as the basis for seeking to clarify the legislation, is that the class by which the beneficiaries were to be ascertained was not conceptually certain because the class was unintentionally left blank in the trust instrument. Any amendment to the Trusts Law should ensure that objects of the trust should be ascertainable from the outset by ensuring the class is certain.

A proposal to reform the law to allow for a valid trust to be created without having to describe any objects but subject to an overarching power to add objects at any point during the trust period (which in Jersey is potentially indefinitely) is likely to give rise to more uncertainty, not less. There is also a legitimate concern that...