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2018 is a year of notable legislative anniversaries for Guernsey’s private wealth industry.

The first of these on 8 January marked five years since the introduction of the Foundations (Guernsey) Law, 2012 (the ”Foundations Law”), while 17 March signalled 10 years since the Trusts (Guernsey) Law, 2007 (the ”Trusts Law”) came into effect. Together, these anniversaries are a reminder of the jurisdiction’s ability to innovate and to adapt to changing market conditions.

Trusts are established for any number of reasons, including asset protection, estate planning, tax planning or to circumvent forced heirship regimes.

The introduction of new Trusts Law in Guernsey on 17 March 2008 replaced in its entirety the previous 1989 legislation and created a more flexible framework for local industry. The Trusts Law was ahead of its time and that continues to be the case today with many of its innovations still being adopted in other jurisdictions.

Some of the key changes that were introduced when the new Trusts Law came into force were;

• the introduction of (non-charitable) purpose trusts, which can be established to hold property or to exercise functions without conferring benefit to any person, 

• the removal of a time limit on the duration of a trust so that a Guernsey trust can be established for an unlimited period, and 

• clarification around both the position of retiring trustees and the rights of beneficiaries to information.

Clarifying the circumstances under which information has to be given to beneficiaries is a notable element of the Trusts Law. Under the Trusts Law the terms of a trust may expressly exclude beneficiaries’ rights to information. This is something that had become increasingly pertinent for many settlors who worry that if successive generations rely upon the family wealth, rather than making their own way in the world, then this may be an impediment to their personal development and character. The Trusts Law also confirms that a trustee is not obliged to disclose documents which reveal his deliberations and decisions. The beneficiaries do however have a right to apply to the court for information in a proper case and a trustee always has an irreducible fiduciary duty to account for his trusteeship. The Trustee is obliged to account to someone within the class of beneficiaries. If it is a particular concern of the settlor that some beneficiaries should not even be aware of the fact that they are beneficiaries then, as you will see below, a Guernsey foundation which allows for ”disenfranchised beneficiaries” might offer a suitable solution.

The introduction of reserved powers provisions was also particularly welcome. It was always the case that a properly crafted trust could reserve or grant certain powers to the settlor or a third party, but the position was usefully codified in the Trusts Law. The powers which may be reserved or conferred in this way include the power to revoke or vary the terms of the trust; appoint trust property; direct the trustees in relation to the management of trust property; appoint or remove trust officials and to change the proper law of the trust. Whilst the introduction of these provisions has gone a long way to providing certainty that a trust will be not be invalidated by the reservation of powers, it remains an area where professional advice is essential. Whether in any given case it is a good idea to have these powers reserved to the settlor or granted to someone else, is a different matter entirely.

For those settlors whose primary concern is to protect their assets, the Trusts Law contains a robust “firewall” provision to confirm that all issues regarding the capacity of the settlor to create a trust, the interpretation of the trust and its administration will be a question of Guernsey law alone. This helpful provision offers significant protection from hostile claims of creditors, spouses and beneficiaries made outside of Guernsey, as well as protecting the trust from foreign forced heirship rules.


The introduction of the Guernsey foundation five years ago provided clients with a solution to use alongside or instead of a traditional trust. It marked an important development for Guernsey, which has a long association with the trust, a common-law concept, but one that was arguably less well understood in civil law jurisdictions and some of the emerging markets.

While foundations are not a new concept in the private client world, Guernsey has developed its own structure allowing enhanced flexibility compared to other jurisdictions while retaining the solidarity needed to instil confidence and bring familiarity for those seeking to use them.

It was always envisaged that Guernsey foundations could be established for philanthropic purposes and a sizeable new stream of business is emerging here for local service providers. Modern day philanthropists are looking for innovative ways in which to structure their philanthropic endeavours. Their prime focus is often not the tax advantages of charitable status, but rather a desire to effect social change or promote political reform or other causes. They are often highly successful entrepreneurs who wish to be actively engaged in philanthropy during their lifetimes. At Carey Olsen, we have helped to set up several substantial philanthropic foundations since the introduction of foundations in Guernsey. These structures are often established to hold shares in the client’s multinational businesses, so that profits generated can be used for the benefit of their chosen causes.

As well as philanthropic establishments, foundations have been used as an alternative to trusts for some families and as holding vehicles for family offices. The Guernsey Foundations Law, which more closely follows the model of the civil law foundation, is quite different from that in Jersey and provides families with a choice. There are now a significant number of foundations in the island being used in both the private wealth and investment industries in a variety of novel ways. We were pleased to have established the first ‘Private Trust Foundation’ where, in an interesting combination of common law and civil law ideas, a foundation was created to itself act as trustee of a trust. 

The distinctive facet of a Guernsey foundation is the ability to create classes of enfranchised beneficiaries and disenfranchised beneficiaries with different rights in respect of accessing information about the foundation. Enfranchised beneficiaries are entitled to information about the foundation and are entitled to make certain applications in relation to the foundation in court. Disenfranchised beneficiaries are not entitled to any information about the foundation, nor do they have any standing to make any applications to the court. Conveniently, the Constitution of a foundation may provide a mechanism by which a disenfranchised beneficiary may become an enfranchised beneficiary and vice versa. This may be useful where the circumstances of a beneficiary or the composition of the foundation assets could change, which would make it in the interests of the foundation or its beneficiaries to limit a beneficiary’s access to information.

At the start of 2018, the number of foundations registered in Guernsey was nearing 100. The relatively small number of Guernsey foundations registered to date belies the success of the introduction of foundations in Guernsey. Whilst relatively small in number, many of the foundations which have been registered in Guernsey hold exceptionally high value assets, the management and administration of which is taking place locally. It is not the case that foundations are better than trusts, or vice versa, but with the introduction of the Foundations Law, Guernsey has an additional tool in the toolbox.


The introduction of foundations legislation locally has given us an additional platform from which to meet client needs. This is particularly true for clients from civil law countries and other regions such as the Middle East, which has emerged as a key market in recent years for fiduciary business coming into Guernsey for asset protection and estate planning reasons. The island’s stability and strong rule of law provide reassurance in uncertain times, while trusts and foundations established in Guernsey also enable settlors to pass assets to successive generations outside of the rigidity of foreign forced heirship regimes (such as those imposed by Shari’a law) that would otherwise apply to their estates.

It is understandable that those who have worked hard to build their wealth, will wish to protect it. Properly advised structures, like those found in Guernsey with good corporate governance, are an essential tool in preserving family wealth. 


Guernsey is conveniently located with only a 40-minute flight time to London, the time zone is BST and the island’s official language is English. There is a significant level of trust and private wealth expertise to be found in Guernsey and a well-established infrastructure of professional support including in the legal, accounting, audit, tax and actuarial fields.

Guernsey’s reputation as a well-regulated and transparent jurisdiction with first class fiduciary expertise is making Guernsey the jurisdiction of choice for many corporate and individual clients. Being a small jurisdiction, Guernsey has the ability to innovate and to do so quickly. Government and industry can work together to introduce laws which ensure that the excellent reputation of the jurisdiction is retained, whilst also meeting the needs of a sophisticated and discerning client base.   EG

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