Trusts

Common law jurisdictions – such as England – are more familiar with the trust concept than those governed by civil law. The advantages of a trust structure come from the distinction between legal and beneficial ownership which is best explained by looking at how the trust was conceived.

Early examples of the trust can be traced back to 13th century Franciscan monks. Their order forbade them from owning property and therefore they had to find a way around these rules. They therefore transferred land and other assets to a third party (the trustee) who would hold them for the use and benefit of the monk. The land and assets were legally owned by the trustee but beneficial ownership was retained by the monk (the settlor). Equally an English knight leaving to fight in foreign lands was often concerned as to how his lands would be managed in his often long absences or in the event of his death. He therefore would transfer his property to trustees to be held for the benefit of his wife and heirs.

The trust today has many and disparate uses and benefits. However the basic concept has not changed since it first came into being many centuries ago in that assets are transferred to a trustee who has a duty to manage the assets for the benefit of beneficiaries.

Whilst the trust concept has remained the same since its inception, there are now fixed rules that govern the relationship between the various parties to a trust. The trustees are subject to very strict duties respecting the way in which they carry out their obligations towards the beneficiaries and any beneficiary can go to the court for an order compelling his trustees to act as he should. In more recent years trustees have been operating in a more stringent regulatory environment with jurisdictions such as Guernsey having introduced a licensing system for both individual and corporate trustees. This regulatory regime has ensured that the Island is at the forefront of anti‑money laundering procedures – giving clients confidence regarding their choice of jurisdiction – but without being so bureaucratic as to stifle our ability to continue to offer a highly flexible service to our clients.