Guernsey’s financial services industry is marking 10 years since the Trusts (Guernsey) Law came into effect – a development many in the industry remember for its innovation and farsightedness.
The 2007 legislation, which replaced the Trusts (Guernsey) Law, 1989, was designed to create a more flexible framework for the local trust industry and to provide better protection for both settlors and trustees.
The Guernsey Trusts Law remains a reminder of the jurisdiction’s ability to innovate and to adapt to changing market conditions, a point of view reinforced today by trust and fiduciary lawyer Russell Clark (pictured).
“Since its inception in 1989, the Guernsey Trusts Law has been extremely welcome and robust legislation that has helped to underpin the development of the fiduciary industry in Guernsey,” Mr Clark.
“We have continued to improve it and tweak it over time and are now seeing many of the changes introduced in 2008 being copied elsewhere. For example, Jersey is now looking to introduce a ‘non-possessory lien’ along the same lines of that which we introduced in the 2007 revision.”
In addition to clarification around the position of retiring trustees which saw Guernsey create a “non-possessory lien” over trust assets in favour of retiring trustees, other key changes brought in 10 years ago included the introduction of purpose trusts, a removal of limits on the length of a trust’s duration and clarification around the rights of beneficiaries to information.
Clark said clarifying the circumstances under which information has to be given to beneficiaries was a notable element of the Guernsey Trust Law and one that was becoming increasingly pertinent for many settlors.
“There is often concern amongst the very wealthy, particularly those who are self-made that if successive generations rely upon the family wealth, rather than making their own way in the world, then this may be an impediment to the development and character of the younger generation and their drive and ambition,” he said.
A welcome development
“In the 2007 legislation we introduced wording to clarify that a trust instrument can restrict provision of information to beneficiaries in particular cases, a restriction which is subject to the ability of a beneficiary to apply to the court to obtain further access to information, but where the court retains discretion as to whether that information should be disclosed or not. This was a welcome development in 2008 and is again something that other jurisdictions are now looking to incorporate into their own models.”
Carey Olsen is a member of a new working party tasked with reviewing the current law, as it was when the 2007 law itself was introduced.
Clark added: “It is reassuring that our innovations of a decade ago are being adopted elsewhere, but we must continue to keep the legislation under review. We need to ensure that it remains fit for purpose and that it maintains a balance between the desires of settlors on the one hand and the rights of beneficiaries on the other.”