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Global - Comparison of Trusts in BVI, Cayman, and The decision as to where to establish an can only be made based on the specific requirements of the client. It is not possible to make an assertion that one jurisdiction is always more appropriate than another. This note does not therefore attempt to guide the reader to any one jurisdiction over another. Instead it highlights some of the features which Cayman, BVI, Guernsey and Jersey and have in common and where they are different. It also describes certain of the legal requirements in respect of trusts in each jurisdiction and examines some of the factors to consider when deciding which jurisdiction to use.

BRITISH GUERNSEY JERSEY

Principal legislation Act (as amended in Trusts (2020 Revision). The Trusts (Guernsey) Law, Trusts (Jersey) Law 1984 1993, 2003 and 2013). 2007 (the "Trusts (Guernsey) (as amended in 1989, 1991, Fraudulent Dispositions Law Law"). The Public Trustee 1996, 2006, 2012 and 2013 (the Virgin Islands Special Trusts (1996 Revision). () Law, "Trusts (Jersey) Law"). Act, 2003 ("VISTA"). Perpetuities Law (1999 2002. Recognition of Trusts Act Revision). (Overseas Territories) Order 1987. Banks and Trust Companies Law (2020 Revision). ' Relief Act.

Application of principles of Yes, subject to modification by Yes, subject to modification by Guernsey's legal system has its Not directly, but many of these English and BVI . Cayman Islands statute. origins in customary Norman principles are reflected by equity French law which has evolved Jersey statute and in Jersey over time to include some customary law and where the intervention of the equitable statutory provisions are silent principles of the English or the issue is absent in common law. Guernsey's trust customary law the courts look law is a non-codified statutory to English and other framework. Commonwealth cases for guidance. In terms of case law where Guernsey customary law and local statute are silent the Guernsey courts will look to English and other commonwealth authorities for Page 2

BRITISH VIRGIN ISLANDS CAYMAN ISLANDS GUERNSEY JERSEY guidance, as those are considered to be of 'persuasive' (but not binding) status.

Status of the jurisdiction and The BVI is a British Overseas The Cayman Islands is a British Guernsey is a UK Crown Jersey is a UK Crown court system Territory which is self- Overseas Territory which is Dependency which is Dependency which is governing and part of the self-governing and part of the self-governing and part of the self-governing and part of the Commonwealth. The head of Commonwealth. The head of Commonwealth. The head of Commonwealth. The head of state is HM the Queen of state is HM the Queen of state is HM the Queen of state is HM the Queen of and the UK is England and the UK is England and is England and the Crown is responsible for the responsible for the responsible for the responsible for the appointment of the BVI's appointment of the Cayman appointment of Guernsey's appointment of Governor, external affairs, Islands' Governor, national Lieutenant Governor, and the Jersey's Lieutenant Governor, internal security and the security and the administration senior members of the and the senior members of the administration of the courts. of the courts. judiciary such as the Bailiff and judiciary such as the Bailiff and deputy Bailiff. Guernsey has its deputy Bailiff. The BVI is part of the Eastern The Cayman Islands has its own independent court Court system which own independent court system. system.The Privy Council in Jersey has its own independent was founded in 1967. court system. The Privy Council in London is London is the final Court of The Privy Council in London is the final court of appeal. appeal. The Privy Council in London is the final court of appeal. the final court of appeal.

Government regulatory None (except in the case of None (except in the case of None (except in the case of None (except in the case of approvals certain unit trusts). certain unit trusts). certain Unit Trusts). However, certain unit trusts). any person providing regulated services to trusts 'by way of business' in or from within the Bailiwick of Guernsey (eg trustee or protector services) must hold a licence issued by the Guernsey Commission ("GFSC") (see further below). Page 3

BRITISH VIRGIN ISLANDS CAYMAN ISLANDS GUERNSEY JERSEY

Government fees None. None (except CI$500.00 per None. None. annum if voluntarily registered as an exempted trust and in the case of certain unit trusts).

Types of trusts . Discretionary trust. Discretionary trust. Discretionary trust. trust. Life interest trust. Life interest trust. Life interest trust. Charitable . Charitable purpose trust. Resulting, implied and Charitable purpose trust. constructive trusts. Non-charitable purpose trust STAR trust (see below). Non-charitable purpose trust (see below). Purpose trusts (both charitable (see below). (nomineeship). and non-charitable). Bare trust (nomineeship). Bare trust (nomineeship). Unit trust. Bare trust (nomineeship). Unit trust. Unit trust. Pension trust. Unit trust. Pension trust. Pension trust. Employee benefit trust. Pension Trust. Employee benefit trust. Employee benefit trust. Exempted trust (see below). Employee Benefit Trust. Most of the above forms of Most of the above forms of trust can be set up as a VISTA Most of the above forms of The Trusts (Guernsey) Law trust can be set up as a trust (see below) or as settlor- trust can be set up as a settlor permits settlor-reserved settlor-reserved power trust reserved power trust. reserved power trust powers trusts (see below). (see below) or an asset (see below) or an trust (see below). protection trust (see below).

Timing A BVI trust is capable of being A Cayman Islands trust is A typical Guernsey A Jersey trust is capable of established within a few days, capable of being established discretionary trust is capable being established within a few assuming that AML within a few days, assuming of being established within a days, assuming that AML requirements are satisfied. that AML requirements are few days, assuming that AML requirements are satisfied. satisfied. requirements are satisfied. Other types of trusts such as pension trusts (which require approvals) take longer. Page 4

BRITISH VIRGIN ISLANDS CAYMAN ISLANDS GUERNSEY JERSEY

Trust duty Trust duty of US$200.00 is Stamp duty of CI$40.00 on None. None. payable on settlements and settlement and declaration of declarations of trust by affixing trust but confidentiality is revenue stamps to the maintained since the payment document which must be of duty does not involve the cancelled by an 'authorised submission of the document person' (which includes the to the Cayman Islands settlor, a trustee or a BVI authorities. lawyer), but confidentiality is maintained since the payment of the duty does not involve the submission of the document to the BVI authorities. Bare trusts and charitable trusts are exempt.

Requirements for trust to None. None (except in the case of None (except in the case of None (except in the case of have local assets or to be certain unit trusts). certain unit trusts). certain unit trusts). administered locally

Filing requirements and Except in the rare case of Except in the case of certain Except in the case of certain Except in the case of certain confidentiality certain unit trusts which are unit trusts which are regulated unit trusts (which are regulated unit trusts which are regulated 'public funds' and thus need to mutual funds under the Mutual as collective investment by the Control of Borrowing be registered in accordance Funds Law (2020 Revision) and schemes by the GFSC under (Jersey) Law 1947 or the with the requirements of the in the case of exempted trusts the Protection of Investors Collective Investment Funds Mutual Funds Act 1996 (in respect of which documents (Bailiwick of Guernsey) Law, (Jersey) Law 1988 (as (as amended), there are no lodged are not available for 1987 (as amended) (the "POI amended) and thus need to be public filing requirements for public inspection), there are no Law") and thus need to be registered in accordance with trusts and trust instruments are public filing requirements for authorised by or registered the requirements of those confidential documents. trusts and trust instruments are with the GFSC in accordance there are no public filing confidential documents. with that law) there are no requirements for trusts and The registered agent of a public filing requirements for trust instruments are company which is an exempt The Confidential Information trusts in Guernsey and trust confidential documents. private trust company (see Disclosure Law, 2016 ("CIDL") instruments are confidential below) must retain copies of makes it a breach of the duty documents. An exempt private trust the and other of confidence to disclose company (see below) must be essential records at their offices confidential information administered by a person who Page 5

BRITISH VIRGIN ISLANDS CAYMAN ISLANDS GUERNSEY JERSEY in the BVI. There is no otherwise than in prescribed is licensed to carry out trust requirement for the regulatory circumstances set out in Unless it obtains a company business under the authorities to be provided with section 3(1) of the CIDL, such discretionary exemption from Financial Services (Jersey) Law these or for them to be filed as under certain Cayman the GFSC, a private trust 1998 (as amended) but there publicly. Islands laws and as required by company (see below) must be is no requirement for the a Cayman Islands court, among administered by a licensed regulatory authorities to be other limited circumstances. fiduciary business in Guernsey provided with the trust 'Confidential information' is which is licensed to carry out instrument or other essential defined broadly and includes trust company business under records of the trust or for these information, arising in or the Regulation of Fiduciaries, documents to be filed publicly. brought into the Cayman Administration Businesses and Islands, concerning any Company Directors, etc. property of a principal, to (Bailiwick of Guernsey) Law, whom the duty of confidence 2000 (the "Fiduciaries Law"). is owed by the recipient of the There is no requirement for the information. A "principal" is GFSC to be provided with the defined as a person to whom trust instrument or other a duty of confidence is owed. essential records of the trust Section 3(2) of the CIDL further or that these documents are provides that a person who filed publically. discloses confidential information on wrongdoing, or in relation to a serious threat to the life, health, safety of a person or in relation to a serious threat to the environment, will have a defence to an action for breach of the duty of confidence as long as that person acted in good faith and in the reasonable belief that the information was substantially true and disclosed of wrongdoing, of a serious threat to the life, health, safety of a Page 6

BRITISH VIRGIN ISLANDS CAYMAN ISLANDS GUERNSEY JERSEY person or of a serious threat to the environment.

Taxation Income tax is zero-rated in the No taxes in the nature of There are no capital gains or There are no capital or BVI and there are no capital or income tax, corporation tax, inheritance taxes in Guernsey. inheritance taxes in Jersey. inheritance taxes in the BVI. nor Income tax is chargeable on Income tax is chargeable on are payable in persons who are resident or persons who are resident or Specific exemptions from the Cayman Islands. ordinarily resident in Guernsey. ordinarily resident in Jersey. taxation are also contained in In the normal trust situation, the Trustee Act. If a Cayman Islands trust is In the context of a ie with settlor, life tenants and registered as an exempted discretionary trust where a beneficiaries all being trust, the trustee is entitled to non-Guernsey resident settles non-Jersey resident, apply for an undertaking from a trust in Guernsey then non- full exemption from Jersey the Financial Secretary of the Guernsey resident beneficiaries taxation is given to foreign Cayman Islands that it will be are not subject to Guernsey income and Jersey bank exempt from local tax (if any income tax. This exemption is interest, by concession. should be introduced) for up automatic. This exemption is automatic, to 50 years. and does not need to be applied for.

Trustees Minimum of one trustee Minimum of one trustee Minimum of two unless: Minimum of one trustee (corporate or individual). (corporate or individual). (corporate or individual). 1. one was originally Subject to special requirements Subject to special requirements appointed; Subject to special requirements for VISTA and non-charitable for STAR trusts and certain for certain types of unit trusts purpose trusts, trustees can be types of unit trusts which are 2. a corporate trustee is which are regulated by the licensed BVI professional licensed mutual funds, trustees appointed to act; or Control of Borrowing (Jersey) trustees, BVI exempt private can be licensed Cayman Islands Law 1947 or the Collective trust companies, professional trustees, 3. the trust instrument Investment Funds (Jersey) Law foreign corporate trustees or Cayman Islands private trust permits just one. 1998 (as amended), trustees individuals (wherever resident). companies, foreign corporate can be licensed Jersey trustees or individuals professional trustees, Jersey Any Guernsey resident trustees (wherever resident). private trust companies or must be licensed fiduciaries or foundations, foreign corporate personal fiduciary licence trustees or individuals holders under the Fiduciaries (wherever resident). Law in order to act as professional trustees to Page 7

BRITISH VIRGIN ISLANDS CAYMAN ISLANDS GUERNSEY JERSEY Guernsey trusts (and any overseas trusts). Unit trusts which are collective investment schemes under the POI Law generally require a trustee licensed to provide custodial services to collective investment schemes under the POI Law.

Private trust companies Yes. Under The Financial Yes. Under the Banks and Yes. Under the Fiduciaries Law. Yes. Under the Financial permitted Services (Exemptions) Trust Companies Law (2020 See ' memo: Private Services (Trust Company Regulations 2007. Revision) and the Private Trust Trust Companies in Guernsey. Business (Exemptions)) (Jersey) See Walkers' memo: Company (Amendment) Order 2000. See Walkers' Regulations Enabling Private Regulations (as amended). memo: Private Trust Trust Companies to be See Walkers' memo: Private Companies in Jersey. Established in the BVI. Trust Companies and Restricted Trust Licence Companies.

Regulations of professional Yes. By the BVI's Financial Yes. By the Cayman Islands Yes. By the GFSC which Yes. By the Jersey Financial trustees Services Commission. Monetary Authority. regulates professional licensed Services Commission. trust companies who act as trustees to Guernsey law governed trusts (and overseas trusts) under the Fiduciaries Law.

Protectors permitted Yes. This is made clear by BVI Yes. Yes. Yes. statute.

Application of the relevant Most of the provisions of the The Hague Trusts Convention The provisions of the Hague The provisions of the provisions of the Hague Hague Trusts Convention have has not been extended to the Trusts Convention have been Hague Trusts Convention have Trusts Convention been extended to the BVI by Cayman Islands. extended to Guernsey. been extended to Jersey and statutory instrument and many many of these are reinforced of these are reinforced by BVI by the Trusts (Jersey) Law. Page 8

BRITISH VIRGIN ISLANDS CAYMAN ISLANDS GUERNSEY JERSEY statutory provisions dealing with conflict of laws.

Anti- The Trustee Act contains The Trusts Law (2020 Revision) The Trusts (Guernsey) Law The Trusts (Jersey) Law now provisions and provisions robust, comprehensive and contains robust, contains robust, contains robust, preventing judgments based carefully crafted provisions comprehensive and carefully comprehensive and carefully comprehensive and carefully on such provisions from protecting most BVI trusts (and crafted provisions protecting crafted provisions designed to crafted provisions protecting being enforced against trusts dispositions to their trustees) most Cayman Islands trusts protect Guernsey trusts from most Jersey trusts from 'forced heirship' claims. (and dispositions to their forced heirship claims. (and dispositions to their These also prevent foreign trustees) from 'forced heirship' trustees) from 'forced heirship' judgments based on such claims. These also prevent claims. These also prevent claims from being recognised foreign judgments based on foreign judgments based on or enforced in the BVI. such claims from being such claims from being recognised or enforced in the recognised or enforced in Cayman Islands. Jersey. These provisions may not apply to trusts set up by Jersey domiciliaries although this is currently under review and the restriction is likely to be removed.

Non-charitable purpose Yes, provided, inter alia, that Yes, under the Special Trust Yes, non-charitable purposes Yes, by reason of Article 12 of trusts permitted the purpose is specific, Alternative Regime, commonly trusts are permitted in the Trusts (Jersey) Law reasonable and possible, at referred to as the STAR law, set Guernsey provided the relevant provided that the trust least one trustee is a out in Part VIII of The Trusts requirements of the Trust instrument provides for the 'designated trustee' (such as a Law (2020 Revision). The (Guernsey) Law are met and an appointment of an enforcer to BVI licensed trustee or objects of a STAR trust or Enforcer is appointed in enforce the trust in relation to registered private trust power may be persons or relation to the non-charitable its non-charitable purposes. company), and an enforcer is purposes or both. The persons purposes. The purposes may be of any appointed. See Walkers' or purposes may be of any number or kind, whether memo: Non-Charitable number or kind, whether charitable or non-charitable, as Purpose Trusts in the BVI. charitable or non-charitable, as long as the purposes are long as the purposes are lawful lawful, not contrary to public and not contrary to public policy or so uncertain as to policy. A STAR trust must have render performance at least one trustee that is a impossible. trust company licensed, or a Page 9

BRITISH VIRGIN ISLANDS CAYMAN ISLANDS GUERNSEY JERSEY private trust company registered, in the Cayman Islands. See Walkers' memo: STAR Trusts.

Settlor reserved power trusts Yes. These are permitted as a Yes. The Trusts Law (2020 Yes. Pursuant to section 15 of Yes. Article 9A of the Trusts permitted result of section 86 of the Revision) specifically provides the Trust (Guernsey) Law (Jersey) Law specifically Trustee Act and VISTA trusts that a wide range of powers specifically provides that a provides that a wide range of are also frequently set up to can be reserved by the settlor wide range of powers can be powers can be reserved by the reserve managerial/ of a trust or granted to others reserved by the settlor of a settlor of a trust or granted to administrative/investment without invalidating the trust. trust or granted to others others without invalidating the powers to the settlor as See Walkers' memo: Reserved without invalidating the trust. trust. director of an underlying Powers Trusts. company.

Special legislative provisions No. Such claims would likely Yes. Under the Fraudulent No, although the "firewall" No, although the "firewall" designed to protect trusts be subject to the English Dispositions Law provisions in the Trust provisions in the Trusts (Jersey) and transfers to their Statute of Elizabeth. (1996 Revision) a disposition (Guernsey) Law would probably Law would probably prevent trustees from creditors' made at an undervalue (such prevent the application of non- the application of non-Jersey claims as a disposition to trustees) is Guernsey principles and so any principles and so any such only subject to the claims of a such claims would likely be claims would likely be subject creditor if the creditor can subject to a "Pauline" action to a "Pauline" action under show an intent wilfully to under Guernsey law. Jersey law. defraud and then only for up to six years from the date of transfer. See Walkers' memo: Asset Protection Trusts.

Special legislative provisions Yes. Sophisticated provisions No but, following English Yes, by reason of section 42 of Yes. Provisions which relate to designed to protect third which relate to trustees which principles, a third party may the Trust (Guernsey) Law trustees which deal with third parties such as lenders who deal with third parties are have recourse to the trust fund trustees will incur personal parties are contained in the deal with trustees contained in the Trustee Act. by way of 'subrogation' to the liability if they fail to disclose Trusts (Jersey) Law and provide Some of these provisions will trustee's right to to a third party (with whom that persons paying or lending only apply if the trust reimbursement (where such they are transacting) that the money to trustees need not instrument so specifies. See right exists). trustee is acting in such a consider the propriety of the Walkers' memo: Trustees who capacity. In other cases the transaction or the application lender has recourse to the trust of the money. Page 10

BRITISH VIRGIN ISLANDS CAYMAN ISLANDS GUERNSEY JERSEY deal with Lenders and other fund only by way of Third Parties. subrogation to the Trustee's right of indemnity.

Special legislative provisions VISTA sets up a special No, but Cayman Islands trusts Trust assets can include No. But Jersey trusts specially designed to cater alternative trust regime to commonly include an 'anti- shareholdings in controlled commonly include an for situations in which trust cater for the succession to Bartlett' provision and STAR companies and an 'anti- 'anti-Bartlett' provision and assets comprise shares in controlled companies, trusts can be established with Bartlett' clause can be used purpose trusts can be shareholdings in controlled so that these can be run by a purpose specifically to hold meaning the trustee is not established with a purpose companies their directors free from trustee the shares of a controlled required to intervene in the specifically to hold the shares intervention and the trustee company with no obligation management of that company. of a controlled company with will be exonerated from liability on the part of the trustees to no obligation on the part of for the consequences of not intervene in its management. the trustees to intervene in its intervening eg in investment management. decisions. See Walkers' memo: VISTA Trust Summary.

Perpetuity period for 360 years, plus a 'wait and see' 150 years, plus a 'wait and see' Guernsey trusts may exist in Jersey trusts may exist in trusts rule whereby a disposition or rule whereby a disposition or perpetuity. perpetuity. power will only fail when it power will only fail when it actually takes effect outside actually takes effect outside the perpetuity period. the perpetuity period. A trust which benefits persons Exception for STAR trusts can now be set up as non- which may exist in perpetuity. charitable purpose trust which may exist in perpetuity.

Other features of the Clear provisions as to the Provisions enabling trusts to Clear provisions as to the Clear provisions as to the jurisdiction's trust laws circumstances under which the be registered as exempted circumstances under which the circumstances under which the courts of BVI have jurisdiction trusts and for trust documents courts of Guernsey have courts of Jersey have over trusts. to be lodged with the Registrar jurisdiction over trusts and the jurisdictions over trusts. of Trusts. powers the court have to Provisions relating to the intervene. Provisions extending the construction of express powers circumstances in which the to vary trusts. court may vary trusts on behalf Page 11

BRITISH VIRGIN ISLANDS CAYMAN ISLANDS GUERNSEY JERSEY of minor, unborn or Provisions extending the Definitive statutory powers and unascertained beneficiaries. circumstances in which the duties of trustees and the court may vary trusts on behalf position of outgoing trustees. Cy-près type provisions of minor, unborn or relating to both charitable and unascertained beneficiaries and The Court may approve non-charitable purpose trusts. provisions enabling trust variations to Guernsey trusts in instruments to appoint persons various circumstances such as Provisions relating to the to approve such variations. where unascertained persons standard of trustees' duties. become entitled to an interest Cy-près provisions. under a Guernsey Trust. Provisions relating to the delegation of the trustees' Provisions relating to 'illusory Clear provisions in the position duties to managers and other appointments'. of the Guernsey Court to professional advisers. provide directions to a trustee Provisions enabling managing as to how a trustee should act Specific provisions enabling a trustees to be appointed. in the affairs of a trust. trustee to with itself in respect of different trusts. Cy-près type provisions in the Trusts (Guernsey) Law in respect of both trust property held for charitable and non- charitable purposes. The office of the Guernsey Public Trustee who has powers to act as trustee of a Guernsey law governed trust in certain circumstances.

Updated: 2020 Page 12

For further information please refer to your usual contact or:

Bermuda - Jonathan Betts, Partner | [email protected] | +1 441 242 1511

Cayman Islands - David Pytches, Partner | [email protected] | +1 345 814 6831

Dubai - Daniel Wood, Partner | [email protected] | +971 4 363 7912

Guernsey - Rupert Morris, Partner | [email protected] | +44 (0) 1481 748 936

Hong Kong - Callum McNeil, Partner | [email protected] | +852 2596 3422

Jersey - Robert Dobbyn, Partner | [email protected] | +44 (0) 1534 700 773

Singapore - Robert Foote, Partner | [email protected] | +65 6603 1695

The information contained in this memorandum is necessarily brief and general in nature and does not constitute legal or taxation advice. Appropriate legal or other professional advice should be sought for any specific matter. The title of "partner" is used to refer to a consultant or employee of Walkers () Limited with equivalent standing and qualifications.