Settlor Flashcards
Q1. Under Article 1(1) of the Trusts (Jersey) Law, who is a “settlor”?
A1. Any person who provides trust property or makes a testamentary disposition on trust (or to a trust).
Q2. Once a settlor has transferred property into a valid trust, what is their default role?
A2. None, in principle. They typically have no further rights or duties simply by virtue of being settlor, unless they also serve as trustee, beneficiary, protector, or enforcer.
Q3. Can a settlor automatically apply to court for directions about the trust?
A3. No, not unless they get the court’s permission. This is unlike trustees, beneficiaries, and others specified in the statute (Article 51).
Q4. Is it common for a settlor to reserve powers in the trust deed (e.g., veto powers)?
A4. Yes, especially with offshore or civil-law clients wanting control. However, retaining too much power once raised issues under the Norman customary law rule “donner et retenir ne vaut.”
Q5. What is the literal meaning and effect of “donner et retenir ne vaut”?
A5. “To give and to keep is invalid.” Historically, it invalidated a gift if the donor gave property while retaining full disposal powers.
Q6. How did this rule apply to trusts?
A6. If a settlor reserved so much power that they effectively kept free disposal, the trust could be declared invalid for violating the maxim – akin to having never truly parted with ownership.
Q7. Which types of reserved powers typically did not breach “donner et retenir ne vaut”?
A7. Powers that require co-trustee consent (e.g., a veto subject to trustee agreement) or reserving a life interest. The settlor can influence but not unilaterally dispose of the property.
Q8. In which case did the court find the trust invalid twice over, including under “donner et retenir ne vaut”?
A8. Rahman. The settlor retained total personal control, causing the trust to fail both as a sham and under the Norman maxim.
Q9. How did the 1989 amendment first address “donner et retenir ne vaut”?
A9. It stated no trust terms shall be invalidated by the rule, but only applied to trusts made on or after 21 July 1989. Pre-existing invalid trusts remained invalid.
Q10. What do Articles 9(5) and 9(7) now say regarding this rule?
A10.
The rule does not apply to any question of trust validity, effect, or administration.
It applies to all trusts, whenever created.
So effectively the rule is abolished for Jersey trusts, even retroactively.
Q11. Does “donner et retenir ne vaut” still pose a threat to modern Jersey trusts?
A11. No. It’s statutorily disapplied (Articles 9(5) & 9(7)). A settlor can reserve powers without invalidating the trust under that rule.
Q12. Could a trust still be invalid if the settlor retains control?
A12. Yes, but not under “donner et retenir.” It might fail as a sham if the settlor never truly intended to give up beneficial ownership.
Q13. Summarize the modern position of a Jersey settlor.
A13.
By default, a settlor has no ongoing role unless explicitly reserved or they occupy another trust role.
The old Norman rule “donner et retenir ne vaut” is abolished for trusts, so a settlor can keep substantial powers.
Sham remains a separate concern if the settlor effectively retains complete beneficial ownership or control.
