Trust Guernsey Advocate Paul Richardson Atkinson Ferbrache Richardson

2 Trusts are increasingly used for international estate planning Trusts are more widely recognised Trusts are recognised as a flexible and reliable means of holding assets The Hague Convention on the Recognition of Trusts

3 No Swiss law of trusts Swiss trustees need to find suitable law to govern trusts Hague Convention allows a choice of governing law The Trusts (Guernsey) Law, 2007 provides the ideal framework Switzerland’s Position

4 The most modern legal framework for trusts in the world Two elements – statutory and equitable:  statute provides the framework  equity “fills in the gaps” with reliance on English case law and equitable principles Hutchison -v- Spread [2002] The Trusts (Guernsey) Law, 2007

5 1.Statutory definition “A trust exists if a person (a trustee) holds or has vested in him, or is deemed to hold or have vested in him, property which does not form or has ceased to form, part of his estate – a.for the benefit of another person (a beneficiary), whether or not yet ascertained or in existence; and/or b.For any purpose, other than a purpose for the benefit only of the trustee.” The Trusts (Guernsey) Law, 2007 Key Features

6 2.Directors are not liable as guarantors Removes the requirement for directors of a corporate trustee to act as guarantors in respect to any liabilities arising from breach of trust actions. The Trusts (Guernsey) Law, 2007 Key Features

7 3.No time limits There are no restrictions on accumulation and perpetuity periods. The Trusts (Guernsey) Law, 2007 Key Features

8 4.Purpose trusts Prior to the 2007 Law, purpose trusts were limited mainly to charitable purposes The 2007 Trust Law allows for a purpose trust to be formed for general use  For example, a trust can now have the purpose of owning shares in an underlining company such as a private trust company. As this is corporate in nature it is attractive to those unfamiliar with trusts

9 5.Company/Trust relationship Under the 2007 Trust Law: Trusts can hold all issued share capital of a company The underlying company can continue to self-manage The trustees need to simply receive and distribute dividends Several underlying companies can be used to separate different activities of the trust Through a company the trust can indirectly own immovable property Structure may allow for tax savings for non-domiciled trustees The Trusts (Guernsey) Law, 2007 Key Features

10 6.Settlor/Trust relationship Under the 2007 Trust Law: Settlor’s identity is protected A Court Order is required to obtain Settlor details The Trusts (Guernsey) Law, 2007 Key Features

11 7.Trustee security Under the new 2007 Trust Law: Lien over trust property (non-possessionary) Alternative to/compliments current chain of indemnities Lien continues whether assets held by successor trustee or beneficiary Lien does not attach to real property, unidentifiable property, bona fide transfers of property The Trusts (Guernsey) Law, 2007 Key Features

12 8.Limitation periods 3 years from date of discovery Minor/legal disability:  3 years from ceasing to be a minor/under a legal disability and/or 3 years from guardian’s knowledge Absolute maximum limitation period of 18 years, save from Trustee fraud – no limitation The Trusts (Guernsey) Law, 2007 Key Features

13 9.Reservation of Settlor’s powers Reservation will not invalidate trust Permit Settlor to make/instruct a third party to make distributions BUT Untested Caution is needed Legal advice should be sought The Trusts (Guernsey) Law, 2007 Key Features

14 Summary – The Trusts (Guernsey) Law, 2007 Modern, flexible and reliable No time limits Permits general purpose trusts Permits companies to be held by a trust Settlor may reserve certain powers Increased Trustee security Removes director guarantee Clarifies limitation periods for breach of trust Increased Settlor confidentiality The Trusts (Guernsey) Law, 2007 Key Features

15 Advocate Paul Richardson Atkinson Ferbrache Richardson Guernsey Advocates Tel: +44 (0) Fax: +44 (0) Trust Guernsey