Isle of Man trust law and statutory regimes
Isle of Man trust legislation and related statutory regimes cover trustee duties, reserved powers, charitable trusts, and the statute's perpetuity rule.
Trustee duties and powers
The Trustee Act 2001 sets duties and powers for trustees, including a duty of care when that duty applies. The trustee must exercise care and skill reasonable in the circumstances, taking account of relevant special knowledge or experience.[1]
The Act gives trustees a general power of investment, subject to the provisions in that Part. It permits investments the trustee could make if absolutely entitled to the trust assets, subject to a restriction on investment in land.[1]
The Act also addresses delegation, agents, nominees, custodians, trustee remuneration, and expenses. The application of the duty of care is set out in Schedule 1.[1]
Trust terms and reserved powers
The Isle of Man FSA guidance describes trust terms as being set out in the trust instrument and any subsidiary documents. It says trustees are expected to identify co-trustees, protectors or enforcers, if any, and determine the beneficial objects, including objects of dispositive powers.[2]
The guidance recognizes that reserved powers can result in external direction to a trustee. It says trustees are expected to understand the directing person's authority and assess whether a direction is proper in the circumstances.[2]
The guidance is supervisory material for licenceholders and states that it is not a statement of law.
Charitable trusts and duration
The Trustee Act defines a charitable trust as a trust under which property is held for charitable purposes according to Isle of Man law. The Act also includes provisions specifically addressing remuneration of trustees of charitable trusts.[1]
The Trustee Act changes the perpetuity period in the Perpetuities and Accumulations Act 1968. The amendment allows a period of up to 150 years for a will of a person dying, or any other instrument made, on or after 1 January 2001. The earlier category, made before that date, has an 80-year period.[1] The Trusts (Amendment) Act 2015 later abolished the rule against perpetuities for dispositions made after its commencement and for trusts whose governing law moves to the Isle of Man after that point. Existing dispositions keep the period that already applied to them.
Foundations as a separate statutory regime
The Isle of Man Government describes foundations as a statutory regime with objects stated in a foundation instrument. Those objects may benefit a person or class, serve a specified purpose, or combine those forms.[3]
The foundation rules establish a council to administer assets and carry out the foundation's objects. The rules also set out council functions and the extent to which they may or must be delegated or exercised with another person.[3]
Beneficiaries of a foundation need not be named in the foundation instrument, but must be determined under the foundation rules. An enforcer is required for a foundation formed for a specified non-charitable purpose, while the appointment is optional in other cases.[3]
Related reading
Isle of Man Trustee Act 2001 overview covers the statute's broader structure. Isle of Man trust tax and reporting rules covers tax and reporting rules, while Isle of Man reporting and U.S. foreign trust rules covers information exchange and U.S. foreign trust reporting. Isle of Man trusts for U.S. citizens provides a wider Isle of Man reference for U.S. citizens.
Questions and answers
What does the Trustee Act say about the perpetuity period?
The Act amends the Perpetuities and Accumulations Act 1968. It allows up to 80 years for wills and instruments made before 1 January 2001 and up to 150 years otherwise.[1] The Trusts (Amendment) Act 2015 later abolished the rule for new dispositions, while existing dispositions keep the period that already applied to them.
How does the Act define a charitable trust?
It defines a charitable trust by reference to property held for charitable purposes according to Isle of Man law. The Act has a separate provision on remuneration for trustees of charitable trusts.[1]
What roles may be identified in the trust documents?
The FSA guidance says the trust instrument and subsidiary documents set out trust terms. It also refers to co-trustees, protectors or enforcers, if any, and beneficial objects.[2]
What does the guidance say about reserved powers?
It recognizes that reserved powers may place a trustee under external direction. Trustees are expected to understand the directing person's authority and assess the direction in light of the circumstances.[2]
How are a foundation's objects and council described?
The foundation instrument states its objects, which may benefit persons, serve a purpose, or do both. Foundation rules establish a council to administer assets and carry out those objects.[3]
Related resources
Related glossary terms
- Settlor: A settlor is associated with creating a trust or placing property into it.
- 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.
Related articles and guides
- Isle of Man court structure and legal system: A guide for U.S. citizens to the Isle of Man court levels, the High Court divisions, the appeal route, and the legal system's structure.
- Trust forms and statutory regimes in the BVI: British Virgin Islands law sets out trust forms and regimes, including purpose trusts, enforcer roles, VISTA trusts, and duration and accumulation rules.
Related pages
- Isle of Man: overview: Start page for this jurisdiction.
- Trust legislation
- Trustee regulation and licensing
- Taxation of trusts
- Reporting and information exchange
Sources and data notes
- Tynwald, Trustee Act 2001. https://legislation.gov.im/cms/legislation/acts-of-tynwald-as-enacted/2-primary-2001.html?download=33%3Atrustee-act-2001&start=20. Retrieved .
- www.iomfsa.im, Guidelines on Expected Practice for Trust Service Providers. https://www.iomfsa.im/media/1518/trustguidelinesonexpectedpractic.pdf. Retrieved .
- gov.im, Isle of Man Government, Foundations. https://www.gov.im/categories/business-and-industries/companies-registry/registries/foundations/. Retrieved .
- mannmadegroup.com, Isle of Man trusts: frequently asked questions. https://www.mannmadegroup.com/wp-content/uploads/2020/05/IOM-Trust-FAQ.pdf. Retrieved .
- dq.im, Legal Update: Trusts and Trustees Act 2023, DQ Advocates. https://dq.im/legal-update-trusts-and-trustees-act-2023/. Retrieved .
Dates in this block record when each source was read for this page.