Families which operate internationally or whose financial affairs are otherwise complex have long used Jersey Discretionary Trusts (“JDTs”) to manage, hold, transmit to the next generation, protect and enhance their wealth.
Key Advantages of using JDTs:
- Estate planning: a JDT can provide a flexible mechanism for the succession of family wealth without need for probate, whilst also minimising exposure to regimes that include restrictions on inheritance. In this context, Jersey Trust Law contains specific rules against claims under foreign “forced heirship” regimes.
- Asset protection: a JDT can help to protect assets from the claims of future creditors, on the basis that the legal owner of such assets will be the trustee of the trust rather than the person (the “Settlor”) who has transferred the assets into the trust.
- Taxation: particularly for families with international wealth, a JDT can help to optimise the taxation position. This may, for example, be of interest when family members reside in one jurisdiction and hold assets in another. In addition, in nearly every circumstance, a JDT will not be liable to any form of Jersey taxation.
- Flexibility: JDTs can be varied or adapted to meet changing family circumstances. Settlors can also reserve to themselves certain powers in respect of JDTs. For example, a Settlor may reserve a power to appoint a “Protector” (a trusted third party who would exercise a power of veto over certain of the trustee’s powers).
- Protection of minor / vulnerable beneficiaries: beneficiaries’ access to trust assets can be deferred until specified conditions are met. The interests of such beneficiaries can survive the divorce of parents or guardians.
- Confidentiality: a JDT deed (the document which establishes the trust) is not a public document in Jersey and does not need to be registered with the Jersey authorities. Equally, there is no requirement to file the accounts of a JDT with the Jersey authorities.
- Unlimited existence: there is no limit to the period of a JDT’s existence.
- Limited restrictions on assets that can be held: with the sole exception of immovable property situated in Jersey, all and any assets can be held in a JDT.
- No Government charges: there are no Jersey Government fees or duties on either the creation of a JDT or its continuation.
- Regulated trustees: all Jersey professional trustees are regulated and licensed by the Jersey Financial Services Commission, for the better protection of beneficiaries.
- Ease of closure: a JDT is automatically terminated when the last of the assets held in it is distributed to its beneficiaries. There is no requirement to file closing statements with the Jersey authorities.