Jersey is a well-established trust jurisdiction and an international finance centre.  It has a modern trust legislation and an effective judicial system.  Jersey law is derived from English common law, as supplemented by the Trusts (Jersey) Law 1984 (the “Trust Law”).  Jersey is a leading jurisdiction for the establishment and management of trusts.  Jersey has a well-qualified professional trust sector, modern trusts legislation and an effective judicial system.

Given that all the Beneficiaries and the Settlor are residents outside Jersey and there is no Jersey sourced income, there is no capital gains tax, inheritance tax or stamp duty payable by a trust in Jersey.

Professional corporate trustees in Jersey are regulated by the Jersey Financial Services Commission.

A Jersey Trust may be created by a Trust Instrument setting out the terms of the trust in which the settlor transfers the assets to the trustee on trust for the benefit of the beneficiaries.

The Settlor of the trust is the owner of the assets who settled the assets into a trust.  The professional corporate Trustee is the company which is the legal owner of the trust assets.  The Trustee has the power to hold, administer and distribute the trust assets in accordance with the terms of the trust.  The Trustee holds the trust assets for the benefit of the beneficiaries of the trust.  The Settlor can be one of the beneficiaries but he cannot be the sole beneficiary of the trust.

Article 54 of the Trust Law confirms that the trust assets constitute a separate fund and do not form any part of the property of a trustee.  The Trust Law also imposes fiduciary duties on trustees, regulates the administration of trusts and provides rights of beneficiaries.  

1. Benefits of a trust：
   
   

   （1）	Succession planning The Trustee can hold the trust assets and distribute the trust assets to the beneficiaries in accordance with the terms of the Trust Deed.  The Settlor may give a letter of wishes as a guidance regarding the timing, amount and manner of distribution to the Trustee. The Trustee can hold the shares of a family business for concentration of shareholding of family business and to ensure that the family business can pass to future generations.
   （2）	Asset protection By transferring the assets to the trust, the Settlor segregating the trust assets with his own assets, protect the trust assets from creditor’s claims provided that the intention of setting up a trust is not to defraud creditors and the Settlor does not reserve to himself unrestricted powers to revoke the trust, a trust can serve as an important asset protection functions.  In addition, the trustee can appoint the spouses of the descendants as excluded persons of the trust who cannot benefit from the trust.  The Trustee may cease to make distribution to the beneficiaries who have the risk of divorce.
   （3）	Avoidance of probate Assets owned by an individual usually pass on death in accordance with the terms of a will.  If the assets are held in a wide variety of countries, it may be necessary to obtain a grant of probate with respect to the will in each country where assets are located.  This can be an onerous, lengthy and costly process which can last between six months to two years.  Moreover, there may be estate duties and taxes payable before the estate can be settled and the assets distributed to the heirs of the deceased.  If such assets are settled on trust, the trust can enable the trust assets to be passed on future generations smoothly and according to the wishes of the settlor.
   （4）	Tax planning During the existence of the trust, under the current tax regulations of Hong Kong, Singapore, Cayman Islands, British Virgin Islands, and Jersey, there is no tax reporting obligation for the income generated by the trust assets. However, when a beneficiary receives a trust distribution, there may be tax reporting obligations depending on the tax residency status of that beneficiary. Trust can be used to protect or exclude property settlements for UK inheritance tax purposes and foreign grantor trusts for US tax purposes.
   （5）	Avoidance of forced heirship rules To guarantee that the trust assets can be distributed to the beneficiaries according to the wishes of the Settlor.  An individual from a country with rigid legal or religious inheritance laws may implement a scheme of distribution of assets among his heirs that differs from that prescribed by his domiciliary law.  By establishing a trust in common law jurisdictions such as Hong Kong, Cayman Islands, British Virgin Islands, Jersey and Guernsey, the desired distribution plan can often be implemented.
   （6）	Confidentiality A trust does not need to be registered and it is a private legal arrangement between the Settlor and the Trustee. The information relating to the trust is not accessible by the general public.
   （7）	Philanthropy A trust can be set up for charitable purpose in which the beneficiary of a trust can includes charitable organizations or for charitable purposes.
   （8）	Commercial uses Such as Employee Benefits Trust, Pension Funds, Investment Funds, etc.

   
   
2. Different kinds of Jersey Trusts
   
   

   （1）

   Discretionary Trust A discretionary trust is the most common type of trusts which gives the trustees wide powers to administer the assets and to distribute the assets to the discretionary beneficiaries at their discretion. The trustees will usually be guided by a non-legally binding letter of wishes from the settlor setting out wishes of the settlor regarding the manner in which the trust fund is to be administered and distributed. The letter of wishes can be updated from time to time.  A Jersey Trust may exist for an unlimited period of time.

   （2）

   Reserved Powers Trust The Settlors of Jersey Trust may reserve certain powers as shown below to themselves or confer the powers on the Protector, without invalidating the trust: (a) Power of investment; (b) Power to appoint and remove Trustee; (c) Power to appoint or remove Enforcer, Protector or Beneficiary; (d) Power to revoke, vary or amend the terms of the Trust Instrument; (e) Power to change the proper law of the trust; and (f) Power to give directions in making distributions of the Trust Fund to the Beneficiary.

   
   
3. Charitable Trust and Non-charitable Purpose Trust
   
   Charitable trust can be set up wide variety of philanthropic purpose.
   
   Non-charitable purpose trust can be set up in which property is held by trustee on trust to carry out specific purposes which do not qualify as charitable purposes.  This type of trust often referred to as a purpose trust.  Non-charitable purpose trusts can be used in holding shares in a family trading company.  An enforcer is required to be appointed to enforce the terms of a trust in relation to its non-charitable purposes.
   

Reference:
Trusts (Jersey) Law 1984