Last year Jersey issued a consultation paper proposing a 7th amendment to revise the Trusts (Jersey) Law 1984 in twelve areas where it is thought the legislation could benefit from modification.
The first area under consultation is whether a trust needs a beneficiary at all times during its existence. Currently it is possible for a trust to be in existence without the need of a beneficiary providing they become discernible at some point during the trust period. However, it is thought that the current wording of this provision can be confusing and a clearer revision has been suggested.
Information is also a point that is criticised as confusing. There is need for amendment to set out exactly what information and documentation Settlors and beneficiaries are entitled to and under what circumstances.
Reservation of powers by a settlor is also under discussion, however it has been noted that a settlor that does retain extensive powers over a trust risks being viewed as owner of the trust property.
There is also the possibility to introduce a power for the court to vary the terms of a trust without the consent of all beneficiaries. On one argument, the court already has some power to do this under article 47 in certain circumstances and further control may not been deemed necessary as it seems to counteract the clarity that other proposals of the consultation seek to acquire. However, in certain cases such as where the trust is poorly drafted or whereby beneficiaries disagree on the variation or all beneficiaries cannot be consulted it would provide a useful tool resolving difficult cases.
Other areas also covered under the consultation are arbitration provisions, trustees self-contracting, extension of indemnity provisions, presumption of lifetime effect and forced heirship known as legitime.
The emphasis seems to be on seeking clarity on a number of areas that have come under examination before creating legal confusion as to the operation of trusts and in some cases their validity. The suggested amendments would go a long way to addressing these issues and would serve to strengthen Jersey’s evolving trust industry.