Jersey foundation and trust in 2024

Jersey foundation

1. Purpose and potential uses of a Jersey foundation:
   • The Foundation registration laws were introduced in Jersey in order to cater for wealthy Clients from non-trust jurisdictions, who prefer contractual arrangements offshore;
   • The primary purpose of this entity is to facilitate the confidential management of global family assets for the benefit of designated beneficiaries especially in family inheritance or succession cases;
   • Registration of a foundation by a settlor allows the individual to complete a wish and the assets put in trust by the settlor become the assets of the foundation;
   • A foundation is most suitable for holding assets such as properties and other forms of investments and has traditionally been used to hold and pass assets from one generation to another in complete confidentiality;
   • This entity is also an ideal vehicle to hold shares in a private trust company (PTC) since unlike companies, foundations do not have shareholders and may also be free of beneficiaries, earning it an orphan status.
2. The key features of a Jersey foundation include:
   • A Jersey foundation has a separate legal personality distinct from anybody with any interest in the foundation;
   • The entity does not have a board of directors, but appoints a foundation council (FC) instead to administer its assets and carry out its objects;
   • The foundation council can be made up of entities or natural persons of any nationality and at least one member who must be a resident of Jersey;
   • The members of the council represent the foundation and carry out the will of the founder as stated in the entity bylaws. It therefore has a serving function rather than a decision-making function;
   • There is no requirement for this entity to have beneficiaries and if it does, their rights and interests are limited and may be restricted;
3. Other important considerations regarding a Jersey foundation
   • Due to Jersey’s flexible law and attractive regulatory reputation, a Jersey foundation can be established for both charitable and non-charitable purposes;
   • Every foundation council must include a qualified member who must be a person registered under Financial Services (Jersey) Law 1998 to carry on trust company business;
   • A foundation must also appoint a guardian whose main objective is to ensure that the foundation council carries on its mandates to the letter;
   • A Jersey foundation also enjoys exemption from taxes on distribution of assets to its beneficiaries;
   • Learn more about setting up a family office to hold and manage family assets by comparing the different wealth management vehicles.

Jersey trust

1. Purposes and benefits of a Jersey trust
   • Our Clients use jersey trusts for i) owning real estate, aircrafts or yachts ii) structuring interests in private family mutual funds or private equity investments and iii) providing for the co-ordinated pursuit of family philanthropic objectives;
   • A Jersey trust is highly confidential since it is not a public document and neither does it have to be registered with the local authorities;
   • This entity is an effective vehicle for assets protection from creditors and/or foreign claims based on forced heirship or personal relationship to the settlor;
   • A Jersey trust is an optimum structure for legally minimizing or complete legitimate avoidance of taxes especially for Clients with international wealth;
   • The trust may hold assets through a wholly owned company or companies, meaning different assets can be placed into trust through different companies which enables high risk assets to be segregated from low risk ones.
2. The components of Jersey trust include:
   • The settlor: This is the individual that establishes a declaration of trust and transfers to another entity (the Trustee) the legal title of his/her assets or property, often referred to as the Trust Fund for the benefit of the beneficiary;
   • The Trustee: A Jersey trustee can either be an individual or a body corporate resident in Jersey and is the entity mandated to hold and administers the trust assets and property;
   • The Beneficiary: Beneficiaries are those individuals or legal entities that holds beneficial interest and benefits directly from the assets held on trust;
   • Trust Fund: This is a fund constituted of a variety assets such as movable or immovable property intended to provide benefits to various individuals or legal entities.
3. The main characteristics of a Jersey trust
   • A private trust company (“PTC”) is a company whose sole purpose is to act as the trustee for a specific trust or a related group of trusts, typically in respect of a family and their relatives;
   • The Board of a Jersey PTC can be comprised entirely of the Client’s family members. A Jersey PTC is exempt from the licensing requirements under the Financial Services (Jersey) Law 1998;
   • The most common type of Jersey trust is the discretionary trust due to its flexibility. With this trust, the settlor relinquishes his ownership of the assets once they are transferred to the trustees;
   • The flexibility offered by this type of trust is also underpinned by the trustees having the discretion as to which of the beneficiaries are to benefit, when and by how much;
   • The transference of ownership also means that assets can be passed to future generations without the complication of having to obtain grants of probate.