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Corporate trustee

A corporate trustee is a trustee that is a corporation under the Jersey definition.

In practice

In offshore practice a corporate trustee is usually a licensed trust company rather than an individual. It gives continuity when an individual trustee dies or retires, and it brings the trust under the regulator's licensing, capital and conduct rules. Jurisdictions differ on who must be licensed, and some allow a private trust company to act for a single family under lighter rules, so check the licensing page for the jurisdiction concerned.

Definition and use

The Jersey law defines a corporate trustee as a trustee that is a corporation. In that law, corporation includes a body corporate formed in any place and another person with legal personality, wherever registered or established.[3]

The term appears in Jersey provisions on how a corporate trustee acts for a trust. The trustee may act by a resolution of itself, its board, or another governing body, and that resolution may appoint officers or employees to act on its behalf. For a corporate trustee that is not a company, the law treats its equivalent decision-making process as a resolution.[3]

Cayman law uses the separate term trust corporation. It defines that term by reference to a body corporate licensed to conduct trust business, or registered under the relevant law as a controlled subsidiary or private trust company. Trust corporation is a specific statutory category under Cayman law, while the Jersey definition of corporate trustee turns on whether the trustee is a corporation.[4]

Roles and conditions in the cited laws

The Cayman law attaches a trust corporation condition to special trusts. Except where a court order authorizes otherwise or the statutory section permits it, the trustee of a special trust must be or include a trust corporation. The trustee must also keep specified trust records at that corporation's office in the Islands.[4]

The required records include the special trust's terms and the identity of its trustee and enforcers. They also include settlements and settlor identities, property at the end of accounting years, and distributions or applications of trust property.[4]

The same Cayman statute distinguishes a trust corporation from other trustees when describing appointment of additional trustees. Its provision applies to a sole trustee other than a trust corporation, or a trust with no more than three trustees when none is a trust corporation. In those circumstances, an authorized appointing person or the serving trustees may appoint another trustee by deed, subject to the stated limits and the trust instrument.[4]

The broader trust relationship in the Hague Convention centers on assets controlled by a trustee for a beneficiary or stated purpose. It describes the trustee's title, authority, duty, and accountability, without limiting the trustee to a corporation.

Questions and answers

What does corporate trustee mean?

The Jersey law defines it as a trustee that is a corporation. Its definition of corporation includes a body corporate wherever incorporated and another person with legal personality wherever registered or established.[3]

How can a corporate trustee act under the Jersey law?

It may act through a resolution of the corporation, its board, or another governing body. A resolution may appoint one or more officers or employees to act for it in connection with the trust.[3]

Does the Cayman law use the same defined term?

Cayman law defines a trust corporation as a body corporate licensed to conduct trust business or registered in specified ways under the relevant law. Jersey law instead defines a corporate trustee as a trustee that is a corporation.[4]

When does the Cayman law require a trust corporation for a special trust?

Except where authorized by a court order or permitted under the applicable section, a special trust's trustee must be or include a trust corporation. The trustee also keeps specified records at that corporation's office in the Islands.[4]

Does the Hague Convention limit trustees to corporations?

The Hague Convention does not limit trustees to corporations. It describes assets placed under a trustee's control for a beneficiary or specified purpose, and states that the trustee manages or disposes of the assets under the trust terms and legal duties.[1]

  • Charitable trust: A charitable trust holds property for charitable purposes, and trust laws relate it to purpose trusts and to the other categories of trust used in planning.
  • Purpose trust: A purpose trust holds property for purposes, not for beneficiaries, and relies on an enforcer. Bermuda and Jersey define it differently, as does Cayman.
  • Enforcer: An enforcer is a person given a role in relation to certain trusts. Jersey and Cayman law describe how enforcers are appointed, with their duties and rights.
  • Trust instrument: The Hague Trusts Convention describes a trust instrument as a document that creates a trust or writing that evidences it. It also describes trust terms.
  • Licensed trustees and trust companies: Trustee rules depend on the jurisdiction and the trust's activity. Regulated trust company business sets who may act as trustee for U.S. citizens' trusts.
  • Foundations and trusts: legal structure: Foundations and trusts have distinct legal structures and roles. Legal personality, who has control, and who owns the assets all vary by each jurisdiction.
  • Cayman Foundation Company Formation: Foundation companies arise under Cayman's Foundation Companies Act, 2017. They are separate legal persons with constitutional documents and governance rules.
Sources and data notes
  1. HCCH, 1985 Hague Trusts Convention. https://www.hcch.net/en/instruments/conventions/full-text/?cid=59. Retrieved .
  2. Internal Revenue Service, 26 CFR 301.7701-4. https://www.ecfr.gov/current/title-26/section-301.7701-4. Retrieved .
  3. Jersey Legal Information Board, Trusts (Jersey) Law 1984. https://jerseylaw.je/laws/current/l_11_1984. Retrieved .
  4. Cayman Islands Legislature, Trusts Act (2021 Revision). https://legislation.gov.ky/cms/images/LEGISLATION/PRINCIPAL/1967/1967-0006/1967-0006_2021%20Revision.pdf. Retrieved .
  5. Legislature of Bermuda, Trusts (Special Provisions) Act 1989. https://bermuda.fm/legislation/1591. Retrieved .

Dates in this block record when each source was read for this page.