Guernsey Trust Legislation

Principal trust statute

The Trusts (Guernsey) Law, 2007 is the statute governing Guernsey trusts.^[1] A trust separates legal ownership of property from the right to benefit from it, with a settlor normally transferring legal title to a trustee for beneficiaries or a purpose.^[2]

Subjects addressed in section 14

Section 14(1) addresses questions arising in relation to a Guernsey trust or a disposition of property to such a trust, subject to the trust terms.^[3] Its listed subjects include settlor capacity; validity, interpretation and effect; variation and termination; administration; and trustee or enforcer functions, appointment and removal.^[3]

Reserved and granted powers

Under section 15(1), reserving or granting the specified powers to the settlor or another person does not invalidate a trust.^[4] These include powers to revoke, vary or amend trust terms and powers concerning the advancement, appointment, payment or application of trust income or capital.^[4]

Reserved powers include powers to direct trustee investments or asset management and to require consent before a trustee exercises a function.^[5] Section 15(2) provides that holding a reserved power does not itself make its holder a trustee or, subject to the trust terms, impose fiduciary duties on that holder.^[4]

Trustees and protectors

Trustees are required to act prudently, in beneficiaries' interests, honestly and in good faith.^[2] A protector is not essential to a Guernsey trust's validity, although the trust instrument may require protector consent for specified trustee powers.^[1]

Duration and purpose trusts

A Guernsey trust may have an unlimited duration. Guernsey permits trusts for charitable purposes, non-charitable purposes, or a combination of both.^[2] For a non-charitable purpose trust, an enforcer must be appointed and has a fiduciary duty to enforce the trust's purposes.^[2]

In more detail

The law permits a settlor to reserve or grant specified powers, including powers to revoke or amend a trust, direct trustee investments, appoint or remove trustees or beneficiaries, and change the governing law. Holding reserved powers does not by itself make the holder a trustee or impose fiduciary duties, subject to the trust terms.^[1][4][5]

Key points

A trust instrument may require protector consent before a trustee exercises a specified power. If the required consent is not obtained, the trustee's action may be a breach of trust and open to challenge.^[5]

Related reading

See also Guernsey Trust Types and Features, Guernsey reporting and U.S. foreign trust forms and Guernsey trusts and U.S. reporting rules.

Questions and answers

Related resources

Related glossary terms

• Settlor: A settlor is associated with creating a trust or placing property into it.
• 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.
• Reserved powers: Reserved powers are rights a settlor keeps, or gives to another person, under a trust. Trust laws address their validity and timing, and administration.

Related articles and guides

• Guernsey Trust Types and Features: Guernsey law defines trusts and describes discretionary and purpose trusts, with rules on reserved powers, trust duration and creation for U.S. citizens.
• Trust structures under Bermuda legislation: Bermuda's Trusts (Special Provisions) Act defines trusts and addresses roles, reserved powers, governing law and the duration of non-charitable purpose trusts.
• Isle of Man trust law and statutory regimes: A reference to Isle of Man trust legislation for U.S. citizens, covering trustee roles, charitable trusts, reserved powers, and the statutory perpetuity period.

Related pages

• Guernsey: overview: Start page for this jurisdiction.
• Trustee regulation and licensing
• Reporting and information exchange
• Taxation of trusts
• U.S. treaty and agreements