Issuing of consultation paper on proposed amendments to the Trusts (Jersey) Law 1984

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A decision made (21.07.2008) to issue a consultation paper on proposed amendments to the Trusts (Jersey) Law 1984.

Decision Reference: MD-E-2008-0144

Decision Summary Title :

Trusts consultation paper

Date of Decision Summary:

21 July 2008

Decision Summary Author:

James Mews

Finance Industry Development Executive

Decision Summary:

Public or Exempt?

(State clauses from Code of Practice booklet)

Public

Type of Report:

Oral or Written?

Written

Person Giving

Oral Report:

Written Report

Title :

Trusts consultation paper

Date of Written Report:

21 July 2008

Written Report Author:

James Mews

Finance Industry Development Executive

Written Report :

Public or Exempt?

(State clauses from Code of Practice booklet)

Public

Subject:

The issuing of a consultation paper on proposed amendments to the Trusts (Jersey) Law 1984 (“the Trusts Law”).

Decision(s):

The Minister approved the consultation paper and determined that it should be issued as a green paper by the Economic Development Department.

Reason(s) for Decision:

The Trusts Law is one of the key pieces of legislation for Jersey’s finance industry. In order for our trusts sector to remain internationally competitive, it is important that the law remains up-to-date and reflects developments in trusts practice worldwide. Various suggestions for reform have been received from industry. In accordance with States policy and to ensure all relevant factors are taken into account in any amendment, it is considered important that a consultation exercise is carried out.

Resource Implications:

No measurable cost or manpower implications arise for the Commission, the States or industry.

Action required:

The Minister to approve the consultation paper and the Finance Industry Executive to take such steps as are necessary for it to be issued forthwith.

Signature:

Position:

Minister for Economic Development

Date Signed:

Date of Decision (If different from Date Signed):

Issuing of consultation paper on proposed amendments to the Trusts (Jersey) Law 1984

MINISTER FOR ECONOMIC DEVELOPMENT

TRUSTS CONSULTATION PAPER

1. THE ISSUE AND RECOMMENDATION

1.1. Jersey has a market leading trusts industry, which utilises the Trusts (Jersey) Law 1984 (“the Trusts Law”), widely perceived as a very successful piece of legislation. However, the international trusts market is highly competitive and rapidly evolving. Various suggestions have been made by industry to update the Trusts Law to reflect local and international developments.

1.2. In accordance with States policy, a consultation paper has been prepared so that all interested parties will have an opportunity to contribute to this review.

1.3. It is recommended that the Minister approve the consultation paper and that the paper should be issued.

2. THE CONSULTATION PAPER

2.1. The consultation paper has been prepared by the Economic Development Department in close consultation with industry representatives co-ordinated by Jersey Finance. It includes a diverse range of proposed amendments, as set out briefly below.

2.2. Amendments are suggested to Article 9, concerning the extent of the application of law of Jersey to trusts. The proposed amendments are intended to ensure that decisions in relation to Jersey trusts are made in accordance with Jersey law (as opposed to foreign law).

2.3. The possibility of removing the prohibition on trusts of Jersey immovable property, contained in Article 11(2), is considered and comments are requested.

2.4. The possibility of clarifying what will constitute a valid purpose for a non-charitable purpose trust under Article 12 is considered.

2.5. The possibility of reform to the “Prudent man rule” contained in Article 21 is considered, and it is proposed that it be made clear that trust property should be considered as a portfolio in relation to the trustees’ duty to preserve and enhance its value.

2.6. Article 26, providing for trustees’ remuneration and expenses is considered. It is proposed that, since most Jersey trustees are now professionals, the law should provide for payment of a reasonable fee where the trust deed is silent.

2.7. Article 29 and the beneficiaries’ rights to information about the trust are considered and it is proposed to clarify that these rights are subject to the terms of trust, provided that the principle of accountability is maintained.

2.8. The position of an outgoing trustee is considered in relation to Article 34. It is proposed to amend the article to provide that an outgoing trustee shall have a non-possessory lien over the trust property and also to provide that deeds of indemnity for trustees should be enforceable by retired trustees even when they are not party to the deed.

2.9. Various issues of limitation and prescription are considered in relation to Article 57 in the light of the Law Commission’s recent consultation paper on this subject.

2.10. Certain difficulties which may be faced by a trustee who acts in relation to several different trusts are considered and comments are invited.

2.11. The possibility of introducing a statutory definition of the word ‘charitable’ is considered and comments are invited.

3. RECOMMENDATION

3.1. It is recommended that the Minister approve the consultation paper and that the paper should be issued.

JAMES MEWS

Finance Industry Development Executive