The Jersey Courts have wide powers to make rulings and give directions in relation to the administration of trusts. While not an exhaustive list, there are a number of circumstances which commonly give rise to applications.
Disputes About the Proper Interpretation of the Trust Documents
Sometimes there will be a dispute or uncertainty about the meaning of a trust document. That might be because the trust document has been poorly drafted or because the intention of the settlor is not clear.
An ambiguity in the drafting of a trust may mean that the words of the trust documents don’t properly reflect the real intention of the settlor.
The Jersey Court has power to rectify the wording of a trust document so that its language and meaning properly reflects what was intended when the trust was set up.
Baker & Partners acted for beneficiaries in Jersey’s leading case on the rectification of trusts.
The Royal Court also has the power to vary a trust in certain circumstances where the court is satisfied that it will benefit the beneficiaries.
Disputes Concerning the Disclosure of Documents and Information to Beneficiaries
Beneficiaries are entitled to commence legal proceedings in order to safeguard their rights and hold their trustee to account.
A beneficiary is entitled to request certain information and documents from their trustee about the administration of the trust. The issue of information or documents beneficiaries are entitled to is an area where disputes often arise.
A beneficiary may want disclosure to find out if there are grounds to bring further legal proceedings against the trustee for breach of trust or to challenge a decision of the trustee. Sometimes disclosure is sought in the context of a matrimonial dispute.
The scope of what documents the trustee should and should not disclose to beneficiaries is subject to the overriding power of the Jersey Court. This discretion may result in wider or narrower disclosure depending upon the facts of the case.
Trustee Applications to Court for a ‘Blessing’ of a Momentous Decision
Getting Directions from the Jersey Court
Administering a modern trust structure can be very complex.
Where there is a dispute between “warring” beneficiaries or between the beneficiaries and the trustee about the way the trustee administers the trust, or the trustee would like the approval of the court to take a particularly important step, such as selling a major asset or litigating on behalf of the trust fund, the trustees and beneficiaries can seek guidance and a ruling on how to proceed from the Jersey Court.
Such an application may also be necessary where the trustee’s duties conflict with its other legal obligations such as under anti-money laundering regulations.
Disputes About Trustee Decisions
Trustees have two principal types of power to run the trust: administrative powers and dispositive powers.
Generally speaking, administrative powers are used to manage the trust assets while dispositive powers are used to make distributions to beneficiaries.
The scope of, and any restrictions upon, the way a trustee exercises its powers are governed by the terms of the trust and the general law. The exercise of trust powers are also subject to certain duties trustees owe to beneficiaries.
In some circumstances, it is possible for beneficiaries to challenge or revisit the exercise of a power by the trustee.
Hastings-Bass & Mistake Applications
Running a trust can be complex. Often trusts will form part of a complex structure and the way the trustee’s powers are exercised may often have tax implications in more than one country.
The Jersey Court has power to set aside the decisions of trustees and even the trust itself where relevant considerations have not been taken into account and/or irrelevant considerations have been taken into account and had this not been the case the trustee would have made a different decision.
The court’s power to set aside decisions is very valuable to a trustee, settlor and beneficiary. The power is often used to avoid adverse and unexpected tax consequences. The power of the Jersey Court is considerably wider than that which exists in English law.
Very often, it is possible to have such applications about the administration of a trust heard by the court in private.