Guernsey, Hong Kong, Jersey and Singapore trusts: a jurisdictional comparison
25 August 2020
Guernsey and Jersey are geographically miles apart from Hong Kong and Singapore. However, a detailed analysis of their respective trust frameworks shows that they are not nearly so far apart when it comes to the trust industry. Many aspects of their laws bear striking similarities. Of course, there are still key differences between them too, which may be of relevance when deciding where to establish your trust. This is particularly true when technological advances make geographical distance a far less significant factor.
The appropriate jurisdiction for your trust should be determined on a trust by trust basis, and the offshore Channel Islands and mid-shore Hong Kong and Singapore should not be considered as mutually exclusive options. A combination of Channel Island and Asia trusts may produce the most advantageous result for you and your family.
To assist you when considering the most suitable jurisdiction for your trust, this table provides a detailed comparison of the trust frameworks in each of Guernsey, Hong Kong, Jersey and Singapore, highlighting both common and differing features. For ease, we highlight some key differences identified under the comparison:-
- Non-charitable purpose trusts - Hong Kong and Singapore do not yet permit non-charitable purpose trusts.
- Perpetuity period – Singapore is the only jurisdiction with rules on perpetuity, limiting not only the trust period to a maximum of 100 years, but also preventing any application of the funds which seeks to postpone final vesting beyond that period.
- Asset protection – all jurisdictions have statutory provisions to prevent trusts being attacked by forced heirship provisions. Guernsey and Jersey's statutory firewall provisions go further by also restricting the enforcement of foreign court judgments. In addition to court orders, Jersey's provisions also restrict the enforcement of decisions by foreign tribunals.
- Settlor reserved powers - The statutory list of powers which can be reserved by a settlor without invalidating the trusts is far more extensive in Guernsey and Jersey than in Hong Kong or Singapore, both of which limit reserved powers to investment and asset management.
- Law of mistake - Jersey is the only of the considered jurisdictions to have enacted statutory provisions preserving the Hastings-Bass principles of mistake without the impact of the limitations placed upon this principle in Pitt v Holt.
- Private Trust Companies - Whilst all jurisdictions permit Private Trust Companies, in Hong Kong it remains standard practice to establish these in other offshore jurisdictions.
- Filing requirements – notwithstanding the exemption from tax, trustees of Singapore resident trusts are still required to submit nil tax returns.
- Power to vary – unlike the position in Guernsey and Jersey, the courts in Hong Kong and Singapore do not have the power to vary trusts on behalf of a minor, unborn or unascertained beneficiary.
- Charities – All jurisdictions permit charitable trusts, but there is no statutory or regulatory framework for charities in Hong Kong.
If you have any queries regarding an existing or potential new offshore trust, please get in touch with a member of Bedell Cristin's International Private Client Team who would be very happy to assist. In addition to advising on the creation of Guernsey and Jersey trusts, we also advise on the creation of British Virgin Islands (BVI) and Cayman Island trusts.
For more information on offshore trusts and a comparison of Jersey, Guernsey, BVI and Cayman trusts, see our briefings "21st century trusts: why offshore and on whose shores" and "Offshore trusts: a jurisdictional comparison".