Knowledge

The Jersey States Assembly adopted a series of amendments to the Trusts (Jersey) Law 1984 (the "Trusts Law") through the Trusts (Jersey) Amendment Law 2026, which came into force on 20 March 2026.

The recent amendments to the Trusts Law deal with uncertainties arising from recent case law, and improve practical trust administration.

Priority of claims

Recent high-profile litigation involving the Z Trusts (Equity Trust (Jersey) Ltd v Halabi and ITGL Ltd v Fort Trustees Ltd [2022] UKPC 36) considered how competing claims should be dealt with where trust assets are insufficient to meet liabilities incurred by trustees. The Privy Council held that:

• a trustee's right of indemnity gives rise to a proprietary interest (otherwise known as a "lien") in the trust assets;
• this lien survives a change of trustee;
• a former trustee's lien ranks pari passu (i.e. equally) with the claims of subsequent trustees under their rights of indemnity (rather than on a "first in time" basis)
• a trustee's indemnity extends to the costs of proving its claim in the context of an "insolvent" trust.

However, the Privy Council was not asked to determine the ranking of claims between trustees and other secured parties. The amendments to Article 43A of the Trusts Law address this gap by providing statutory certainty as to the priority of claims.

The additions to Article 43A of the Trusts Law include:

"(1A)    No account is to be taken of any lien arising by operation of law in considering a trustee's right to require to be provided with reasonable security.
…

(4)     An interest in or over trust property, granted or created at any time by the trustee of the trust, that secures the payment or performance of an obligation (including an obligation owed to a trustee or former trustee) takes priority over any lien arising in favour of the trustee or former trustee by operation of law, unless the secured party agrees otherwise.

(5)     For the purposes of paragraph (4), it is immaterial whether the interest is granted or created under the law of Jersey or another jurisdiction."

These amendments support a more stable framework for trusts entering into financing arrangements by confirming that, unless otherwise agreed, secured parties rank ahead of trustee liens arising by operation of law, and that this priority rule applies irrespective of whether the relevant security interest is granted under Jersey law or the law of another jurisdiction.

Termination of trusts

The introduction of Article 43(3A) of the Trusts Law restricts the ability of beneficiaries to direct the trustee to terminate a trust where there is any person who could become a beneficiary under the terms of the trust, or pursuant to the exercise of any power under the trust.

The original wording of Article 43 of the Trusts Law was based on the principle established in the English case Saunders v Vautier [1841] 41 ER 482, under which adult beneficiaries who are together absolutely entitled to the trust property may direct the trustee to terminate the trust and distribute the trust assets to them. In Jersey, it has generally been understood that this mechanism is not available where the trust includes a power to add (or otherwise bring into the class) additional beneficiaries, because the existing adult beneficiaries cannot then be said to be absolutely entitled to the trust property.

In 2019, the Guernsey Court of Appeal (the "Court") in Molard International (PTC) Limited and Pullborough Int. Corp v Rusnano Capital AG (in liquidation)  [2019] GRC 077 examined section 53(3) of the Trusts (Guernsey) Law 2007 (the "Guernsey Law"), which is the equivalent provision to Article 43(3) of the Trusts Law. The Court held that a sole beneficiary could terminate a trust, despite the trust deed containing powers to add new beneficiaries. It was held that although Saunders v Vautier "may well have been the inspiration for section 53(3) (and the equivalent Jersey provision), we cannot necessarily infer an intention to incorporate every detailed aspect of the [principle]".

The Court acknowledged the "potential consequences" of this interpretation of section 53(3) of the Guernsey Law was that it could enable a sole beneficiary to bring a trust to an end against the settlor's intentions. The Court noted this was more likely to affect trusts where the only named beneficiary is a charity (for example, the Red Cross), but that the issue could be "easily addressed by the trustees exercising the power of addition…so as to add further beneficiaries before…any such demand for termination".

Given the persuasive nature of Guernsey decisions, the States of Jersey proactively sought to provide statutory clarity without waiting for local litigation to arise.

The new Article 43(3A) of the Trusts Law expressly provides that Article 43(3) of the Trusts Law "does not apply in relation to a trust:

• (a) if there are any other persons who could become beneficiaries in accordance with the terms of, or pursuant to the exercise of any power under, the trust; or
  
• (b) if the terms of the trust provide for the disposition of trust property for a charitable or non-charitable purpose."

The amendments to Article 43 of the Trusts Law intended to address the uncertainty highlighted by Rusnano and to reinforce the position that the statutory termination mechanism in Article 43(3) of the Trusts Law will not be available where there are potential additional beneficiaries or the trust provides for the disposition of trust property for a charitable or non-charitable purpose. In practice, because many modern trust deeds include the express power to add beneficiaries, as well as other powers which can result in the addition of new beneficiaries, Article 43(3) of the Trusts Law is only likely to be available in a narrower range of cases. Where a termination right is required, this should be expressly included in the trust deed.

Additional amendments

Additional amendments have also been made to the Trusts Law, including:

• Update to the definition of "corporation"
  
  This definition has been widened to include "a body corporate wherever incorporated or other person having legal personality wherever registered or established", avoiding the need to differentiate between corporations or partnerships or other structures.
  
  Under Article 9A, where the powers reserved by a settlor without affecting the validity of a Jersey trust are listed, this expands a power reserved under Article 9A(2) to include giving "directions as to the appointment or removal of, an officer of any corporation in which the trust holds an interest, whether or not the interest is wholly, partly, directly or indirectly held by the trust".
• Article 19 of the Trusts Law
  
  This now expressly prevents a sole trustee from resigning if this would leave the trust without a trustee. This ensures a trust is never left without a trustee; and
• Article 55 of the Trusts Law
  
  This now removes the requirement for "actual notice" of a breach of trust when providing protection to third parties dealing with trustees, so that the protection for a bona fide purchaser for value now applies only where the purchaser is without "notice" of any breach of trust. In practice, this may mean that a purchaser is treated as having notice where the surrounding circumstances would put an honest and reasonable purchaser on enquiry (for example, where it is apparent that the trustee, or purported trustee, lacks authority to enter into the transaction). This change aligns Jersey with broader commercial standards and may require third-party purchasers to take additional care when dealing with trustees.

The recent amendments to the Trusts Law bring clarity for those who deal with or administer trusts, and demonstrate Jersey's commercial responsiveness and pragmatic approach.

Should you require further guidance on the implications of any of these amendments for your trust arrangements, please do not hesitate to contact us.