By Sarah Bartram-Lora Reina, Head of Client and Intermediaries, Jersey
Jersey’s highly regarded trust legislation, which recently celebrated its 40th anniversary, has been reviewed to ensure it remains current and fit for purpose – partly in light of recent key court judgements. Here’s a summary of the main proposed amendments:
Priority for secured lenders in cases of trust insolvency
The first proposed change to the Trusts (Jersey) Law 1984 (“TJL84”) follows the Jersey case of Re Z Trust, which looked at the priority of claims if a trust becomes insolvent and there are both former and current trustees as well as a secured lender.
Whilst the judgement looked at other aspects and is lengthy, the proposed amendment to the TJL84 is to clarify that, in cases where there’s a creditor who has taken security over the trust assets, they can enforce their security before the trustees can claim over the assets for their fees or expenses.
This amendment will be of comfort to lenders and aims to give them more confidence when lending against trust assets.
Trust termination prevented in cases of future beneficiaries
The next proposed change follows consideration of the Guernsey case of Rusnano, which looked at the ability of beneficiaries to call for the termination or variation of a trust under the principles set out in the well-known Saunders v Vautier case.
It was agreed prudent to amend Article 43 of the TJL84 to provide clarity that, in trusts where there’s a power to add new beneficiaries in the future (even if that power isn’t exercisable currently), this provision prevents the trust from coming to an end – even if all the current beneficiaries agree to its termination – unless the class has closed or the trust is discretionary.
This change aims to avoid unnecessary Jersey court applications.
Smaller revisions and deletions
Further small additional changes were proposed, including:
- Clearer rules around when a sole trustee can resign
- Minor corrections to Articles 24, 43 and 55 of the TJL84
Some changes are to be postponed following consultation paper feedback. Namely, the amendments to Article 24, which look at whether a trustee’s exercise of their powers over the purposes of a charitable/non-charitable purpose trust should be included.
There will be no change to Article 43(2) as it’s deemed sufficient to cover trustees in respect of trust termination and indemnities. Article 43(5), which defines liabilities, will be deleted as the term is not mentioned elsewhere.
The word “actual” will be removed from Article 55 for consistency.
Data trusts: potential for further changes?
The review also looked at whether to add rules about data trusts to the law. For now, following the consultation feedback, no changes will be made as Jersey’s trust legislation is already sufficiently flexible to include data trusts.
Data trusts, however, continue to remain an interesting concept. The first in Jersey, known as the LifeCycle project, was established by Digital Jersey and other connected parties on 1 March 2023 and was used to capture, store, analyse and share data relating to the island’s cycling population. The trustee could share this data to third parties under a data request or publicly communicate meaningful data insights. This pilot data trust came to an end on 13 December 2024.
This concept is also being explored in other leading trust jurisdictions, with potential uses in areas such as health data, artificial intelligence, digital identities and ownership rights, conservation data including carbon footprints, property data and smart city initiatives.
Given the proximity, Jersey trustees are paying particularly close attention to developments in the UK – especially new laws on digital assets and data as property. Specifically, we’re keeping an eye on when the UK’s Property (Digital Assets etc) Bill will be enacted, which sets out the recognition of digital assets as property. We’re also watching the work of the Law Commission of England and Wales on the property rights of data as an asset, and whether any further changes to the TJL84 should be made in line with this.
With the increased reliance on data, including its analysis and security, interest in this area will no doubt continue.
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