Cayman Islands

The Cayman Islands introduced its first trusts statute in 1967. The Trusts Law is currently in its 2018 revision (the ‘Trusts Law’). The Cayman Islands is a common law jurisdiction and its court will have regard not only to local reported cases but to reported trusts cases and equitable principles developed over centuries in England and other common law jurisdictions.

Switzerland

Swiss law does not recognize the concept of trusts (although it does recognize trusts created under foreign law). Hence a trust cannot be governed by Swiss law. Yet, Switzerland is seen by many foreigners as an attractive place to live and trusts are often imported by settlors relocating to Switzerland. Switzerland’s popularity as a hub for trust administration and related services has risen during the last years and so has the number of litigation matters involving trust structures. Trustees have become increasingly involved in Swiss proceedings and are frequently parties to complex cross-border disputes; the trustees become a target for aggrieved beneficiaries and family members or ex-spouses.

Guernsey

The Bailiwick of Guernsey is a dependency of the British Crown, with its own government and legal system. The roots of Guernsey law can be traced to the customary laws of Normandy which remain influential in certain areas. However, in modern times the influence of English law has increased and is now dominant, especially in the area of trust and company law.

British Virgin Islands

The legal system of the British Virgin Islands is a common law system based on the English model, comprising statute law and binding case precedents. The principles of English common law and equity apply in the BVI (subject to modification by BVI statutes) pursuant to the Common Law (Declaration of Application) Act (Cap 13) and the Eastern Caribbean Supreme Court (Virgin Islands) Act (Cap 80) respectively. The general principles of trust law are based on English law.

Jersey

The key statutory provision in Jersey is the Trusts (Jersey) Law 1984 (as amended) (the ‘Trusts Law 1984’). The Trusts Law 1984 does not codify the Jersey law of trusts, and accordingly decisions of the Royal Court and Court of Appeal continue to develop Jersey’s customary (common law) in this area. Unless otherwise stated, references in this chapter to ‘Articles’ are to Articles of the Trusts Law 1984.

Breach of Trust Claims

A trust instrument will set out the trustee’s powers and duties in relation to the management, administration, and distribution of trust property. Certain further powers and duties may be imposed by statute or have been developed in the common law. Trustees must comply with these duties, and act properly in the exercise (or non-exercise) of their powers. Where they do not comply with their duties, whether because they act in direct contravention of them or because they improperly omit to act at all, they may be held liable for breach of trust. Similarly, where they act in excess of their powers, or in certain cases improperly fail to exercise their powers at all, they may be guilty of a breach of trust. Breaches of trust can therefore be of many different kinds. They may include:

No-Contest Clauses

‘No-contest clauses’ are designed to discourage or eliminate challenges to the validity of trusts or wills or to the transfer of property to trustees or, sometimes and more widely, to the decisions of trustees or personal representatives. Since it is not possible in law to prevent a beneficiary from launching a challenge because that would attempt to oust the jurisdiction of the court, the technique usually employed is to exclude a complaining beneficiary from benefit or to provide that her interest is forfeit either permanently or while the challenge is maintained or at the discretion of the trustees. The extent to which it is legally possible to effect an exclusion or to forfeit the interest is considered in this chapter. The principal reasons for their inclusion are considered below.

English Trust Law Principles

This chapter is concerned with the internal dimension of the trust: with the persons (whether individuals or corporations) who perform the roles it requires to function, the duties and powers of the trustees, and the jurisdiction of the court (in England and Wales) to supervise the execution of the trust and to resolve difficulties which arise.

Asset Protection and Insolvency

The use of trusts to protect assets from the effects of insolvency has long been an attractive option for those who wish to ring-fence their assets against the claims of creditors. In modern asset recovery litigation, these problems are spread across a number of jurisdictions. Therefore, as well as understanding how such issues are dealt with domestically, it has become increasingly important to understand the detail of offshore legislation and common law as well.

Bermuda

The UK Recognition of Trusts Act 1987 (‘RTA 1987’) was made applicable to Bermuda as of 1 June 1989 by an Order in Council from the UK government. The RTA 1987 incorporates the key provisions of The Hague Convention on the Recognition of Trusts (the ‘Hague Convention’). The Trusts (Special Provisions) Act 1989 (‘TSPA 1989’), one of Bermuda’s key trust statutes, adopted certain provisions of the Hague Convention verbatim and came into effect on 31 January 1990.