Jersey: Law of Offshore
Jersey trusts are governed by The Trust (Jersey) Law 1984, which codified trust law largely along the lines of English-based common law, and the Trusts (Amendment) (Jersey) Law 1989. 'Purpose' trusts were recognized in 1996.
The Trusts (Jersey) Amendment No. 4 Law 2006 introduced settlor-reserved powers to provide greater statutory certainty regarding the level of control and influence a settlor may exercise over the ongoing administration of assets placed into trust. Appeal against judgements of the Royal Court of Jersey lie to the Jersey Court of Appeal and finally to the English Privy Council.
There is no registration requirement for trusts and no fees are payable. The trustees of a non-resident trust (ie one whose beneficiaries are non-resident) are not required to submit returns or provide accounts of the trust to the Comptroller of income tax. Trust accounts must be maintained but audit is not required. Trust documents are normally in English.
Jersey has ratified the Hague Convention on the Law Applicable to Trusts. Jersey permits migration of trusts: trusts may be 'imported' or 'exported' by the simple replacement of trustees and by changing the proper law of the trust.
Jersey has not implemented legislation for Asset Protection Trusts. However, Jersey trust law specifically excludes foreign inheritance laws and provides for non-recognition of foreign judgements.
In November 2000 The Financial Services (Extension) (Jersey) Law came into effect. It is designed to protect consumers by imposing strict new rules on companies specialising in setting up trusts and offshore companies.
The law extends the remit of the Financial Services Commission (FSC) under the Investment Business (Jersey) Law 1998 over banking, investment funds and insurance activities into trust and company management, if the underlying activity is connected with financial services.
Under the law, trust companies need to be licensed to continue in business. The Codes of Practice reinforce the existing requirements for a business to know its customers, to establish the source of their wealth and to report any suspicions. They must also adhere to high standards of integrity, solvency and competence including strong protections for customer money with additional requirements for high levels of qualifications and experience. Furthermore, the FSC will be able to visit businesses to check that they abide by the regulations.
In 2008, the Economic Development Department issued a consultation paper reviewing Jersey’s trusts law. This consultation will help ensure that Jersey’s trusts law remains up to date, reflects recent international developments, and continues to provide a framework that confirms Jersey’s position as a market leader.
Senator Philip Ozouf, the Minister for Economic Development, commented: “The Trusts Law has been to a great extent the engine for the growth of our financial services industry in the last 20 years. Our Law was the first in the market place and others have followed our lead. Subsequently, trusts laws in other places have evolved and in some cases moved ahead of our own product. This consultation is designed to see how we should develop our Trusts Law so as to hone our competitiveness.”
The consultation paper covers ten 'discrete' areas of possible reform, with proposals and questions for respondents to consider in each case. Responses were invited by September 19, 2008.
The Jersey Financial Services Commission launched a consultation in March 2010 on proposed changes to trust company business exemptions with regard to persons undertaking the activity of a director under the Financial Services (Jersey) Law (FS(J)L) 1998.
The Commission said that the proposed changes would affect in particular:
- Individuals that act as directors, on a professional basis, of companies that they do not beneficially own; and
- Individuals that are currently relying on ‘the connected persons exemption’.
The Consultation Paper proposes the following two changes in respect of Trust Company Business exemptions:
To present a new exemption that introduces “de minimis” provisions which will allow an individual to hold a maximum of six directorships (in addition to any that would otherwise be exempt) before the need to register under the FS(J)L is triggered.
To restrict the scope of the ‘Connected Persons’ exemption contained in the note to paragraph 1 of the Schedule to the Financial Services (Trust Company Business (Exemptions No 4)) (Jersey) Order 2000.
The Financial Services (Trust Company Business) (Exemptions Amendment No. 2) (Jersey) Order 2010 came into force partly on November 24, 2010, when the "de minimis" provision was introduced. The remainder of the Order, dealing with the 'Connected Persons' exemption came into force on February 17, 2011.