Variations Of Jersey Trusts: Relevance Of Settlors' Views And Public Policy

RE THE Y TRUST AND THE Z TRUST - ROYAL COURT OF JERSEY, 30 JUNE 2017 (WILLIAM BAILHACHE, BAILIFF, AND JURATS PITMAN AND CHRISTENSEN)

The Royal Court of Jersey has recently approved (on behalf of minor, unborn and unascertained beneficiaries) variations of two trusts established by a late Settlor whereby the beneficial class of each trust was to be widened beyond the parameters that the Settlor had set out during his lifetime.

In considering the application, the Court made observations about the relevance of the Settlor's firmly held views to the Court's discretion to approve the variation, and also addressed potential issues of public policy.

BACKGROUND

The trusts were two of a number of trusts settled by the Settlor directly or indirectly for the benefit of his family, with very substantial value. The Settlor had died a number of years before the application and had a large family.

The beneficiaries of the trusts were originally defined restrictively so as to include issue born as the legitimate child of their father and mother and those subsequently legitimated by the marriage of their father and mother, children of unmarried heterosexual relationships of at least two years' duration at the date of birth, and (in certain cases) adopted children of otherwise childless heterosexual married couples.

Children of homosexual relationships were outside the beneficial class, whether their parents were married, in a civil partnership or otherwise.

The Court received evidence that the Settlor's views (as reflected by the restrictions on the beneficial class described above) were firmly held, notwithstanding that certain family members who fell outside the beneficial class had been raised as grandchildren of the Settlor and he had treated them as such.

After the Settlor's death, the majority of the trusts he had settled had been varied using powers available to the trustees so as to widen the class of beneficiaries to encompass the excluded family members. The evidence showed that the adult beneficiaries had engaged in mature and careful dialogue to establish a consensus on the beneficial class which would allow the family members excluded by the Settlor's definition to become beneficiaries. The revised definition provided for equal recognition of the issue of same sex relationships, general recognition of illegitimate children and potential for their inclusion as beneficiaries (subject to certain safeguards), and relaxation of the criteria for...