Background And Classification Flashcards
Basic Definition
Q1. Which Article of the Trusts (Jersey) Law 1984 defines a trust?
A1. Article 2 of the Law contains the definition of a trust.
Q2. How does Article 2 define a trust in Jersey law?
A2. A trust exists where a trustee holds or is vested with property (not as their own) for:
The benefit of one or more beneficiaries (who may be unascertained or not yet in existence),
A purpose that is not solely for the trustee’s benefit, or
A combination of (1) and (2).
Q3. Does a trust in Jersey have its own legal personality?
A3. No. A trust is not a separate legal person. It’s a legal relationship in which the trustee holds property for others or for certain purposes.
Q4. When we see references to “transferring property to a trust,” who is the actual recipient in strict legal terms?
A4. The trustee. References to “transfer to a trust” are shorthand for transferring property to the trustee to hold under the terms of the trust.
Q5. What does Article 3 say about the recognition of trusts in Jersey?
A5. Subject to the Law, Article 3 states that a trust will be recognized in Jersey as valid and enforceable.
Q6. Are foreign trusts recognized in Jersey?
A6. Yes. If a foreign arrangement meets the definition in Article 2, it will be recognized as a trust in Jersey, even if it does not exactly match every characteristic of a Jersey law trust.
Q7. How does the Law distinguish between a Jersey trust and a foreign trust?
A7.
A Jersey trust is governed by Jersey law.
A foreign trust is governed by a law other than Jersey.
(Trustee location or asset location does not determine this — the governing law of the trust does.)
Q8. Which parts of the Trusts (Jersey) Law 1984 apply to Jersey trusts only, and which to foreign trusts?
A8.
Part 2 (Articles 6–47A) applies only to Jersey trusts.
Part 3 (Articles 48–49) applies only to foreign trusts.
Parts 1, 4, and 5 apply to both, though Part 4’s application to foreign trusts depends on context.
Q9. What is the difference between a charitable (public) trust and a private trust?
A9.
A charitable (public) trust is for a purpose beneficial to the community (e.g., charity).
A private (non-charitable) trust benefits specific individuals (beneficiaries) or specific non-charitable purposes.
Q10. What is a non-charitable purpose trust, and why is it significant?
A10. It is a private trust that is established not for named beneficiaries but for a specific private purpose (that is not charitable). Such trusts can be important in commercial transactions and specialized asset-holding structures.
Q11. What is the difference between an express trust and a constructive trust?
A11.
Express trust: created deliberately by the settlor’s intention (e.g., by a trust deed or will).
Constructive trust: arises by operation of law, where the law imposes a trust due to certain circumstances (e.g., wrongdoing, unjust enrichment), regardless of the parties’ intentions.
Q12. What is a “constructive trustee” and why is the term sometimes confusing?
A12.
A “constructive trustee” is someone the law treats as a trustee (often due to wrongdoing or other equitable reasons) even though they never agreed to be one.
The term can be confusing because sometimes it means actual “asset-based” constructive trust, and sometimes it just refers to a personal liability in equity.
Q13. What is the difference between a fixed trust and a discretionary trust?
A13.
In a fixed trust, each beneficiary’s interest is predetermined or fixed (e.g., “A to receive income for life, then capital to B”).
In a discretionary trust, the trustee (or another appointee) has discretion over how, when, or whether beneficiaries receive anything, and beneficiaries have no guaranteed share.
Q14. What are trust powers and how can they blend fixed and discretionary elements?
A14.
Trust powers allow the trustee to change or override fixed interests by appointing assets to new beneficiaries or altering distributions.
This can create a hybrid scenario: some interests are fixed by default but remain “defeasible” if a trustee exercises a discretionary power to benefit others.
Q15. What is the difference between an inter vivos trust and a testamentary trust?
A15.
An inter vivos trust is created by a living settlor (often via a trust deed).
A testamentary trust is created on death through the settlor’s will and is subject to will formalities.
Q16. Can a will trust deal with Jersey immovable property?
A16.
Generally, express trusts of Jersey immovables made after 23 March 1984 are invalid under Article 11(2)(a)(iii).
However, wills executed before that date might still be valid, as preserved by Article 59(1)(c).
Q17. Why is a trust often described as a flexible legal institution?
A17. Because it can be used for various situations (personal or commercial, short-term or long-term, charitable or private, etc.), and it can be tailored with fixed or discretionary powers to suit many different needs — “one size fits all.”
