The proposed amendments to the Trusts (Jersey) Law 1984 (the “Law”), expected to come into force during 2018, are designed to bring clarity and to allow Jersey trust law to develop in a competitive international marketplace. We summarise below the principal changes that Amendment No. 7 will bring to the Law.
Amendment of Article 9A: powers reserved or granted by settlors
Article 9A which deals with the reservation or grant of powers by a settlor is to be amended to clarify the extent of powers which may be reserved or granted and will also make clear that the reservation or grant of a power will not itself confer trusteeship on the holder of such power.
Amendment of Article 29: provision of information to beneficiaries. Amendment No. 7 will provide that restrictions may be drafted into a trust instrument limiting the extent of a beneficiary’s right to information or documents concerning the trust. A trust instrument may also be drafted to confer rights to request disclosure of information or documents concerning the trust, with trustees being permitted to decline such requests on the basis that it is in the interests of one or more of the beneficiaries not to disclose such information. This is relevant especially where there are younger beneficiaries in the family who may be dis-incentivised to establish financially independent future for themselves were they to have access to documents relating to the accounts of the trust.
These new provisions will be subject to the power of the court to make disclosure orders which override the terms of the trust.
Amendment of Article 34A: extension of indemnity provisions
The proposed amendment to Article 34 which addresses the position of outgoing trustees, will provide for a former trustee to be able to enforce an indemnity which is contained in a contract between subsequent trustees, to which it is not itself a party. The new Article 43A will also allow others, not just trustees, to enforce indemnity agreements to which they are not themselves a party, for example a person engaged in the management of the trust in behalf of the trustee and their employees. The provisions will apply not just on retirement of trustees but also for example when trust property is distributed and when a trust is terminated or revoked.
Amendment of Article 38 : accumulation and advancement
On implementation of Amendment No. 7 it will become permissible for the terms of a trust to require or allow for income which is not accumulated to be retained as income or otherwise added to capital, and with no time limit on such powers. It will no longer be obligatory (with certain exceptions relating to minors) to distribute income which is not accumulated.
Amendment of Article 47: limited widening of the court’s powers in relation to variations of trust
Amendment No. 7 extends the court’s powers to approve trust arrangements on behalf of those who are unable to consent for themselves (e.g. minors), to include adult beneficiaries who have capacity, but who either cannot be found or are a member of a such a wide class of beneficiaries that it is unreasonable for them to be contacted.