For many years now high net-worth families have been creating Private Trust Companies (PTC) to great effect and benefit, with this having become a well-trodden path.

At LGL we are seeing a considerable shift away from the PTC to Private Trust Foundation (PTF) and there are very good reasons why!

Jersey Foundations are incorporated legal entities and in a similar manner to PTC, a Jersey Foundation can be used as a PTF and this can often be a viable alternative to structure family assets for protection and succession planning.

A PTF can be incorporated with the sole objective of acting as trustee of a trust or group of trusts for the benefit of a family. One of the key differences when considering a PTF over a PTC is the fact that PTF is an orphan entity and does not have nor need a shareholders or beneficiaries. Unlike a PTC where typically a Purpose Trust or Foundation would need to be established to own the shares in the PTC, adding both an additional layer of complexity and cost.

A Jersey PTF is managed and controlled by its council, with the requirement to always have a Qualified Member on the council. A Jersey Foundation is also required to have a Guardian to oversee the council and take reasonable steps to ensure that the council carries out its functions in accordance with the objects of the PTF.

Not only is a PTF a more streamlined option in comparison to a PTC, many of the benefits of a PTC can very easily be replicated using a PTF:

  • The Founder or Guardian can hold the power to appoint and remove council members.
  • Family members can be appointed to the council. This allows family members to have an active involvement with the day-to-day decision making of the council and can also be an incredibly useful manner to introduce the next generation to the family assets in a controlled and structured manner.
  • The regulations of the PTF can be tailored specifically to fulfil the families wishes. Specific powers and duties of council members can be drafted as required. In addition, advisory committees can be created to assist with the decision-making process and asset management.

Qualified Member: 

A person licensed to act as a council member of foundations under the relevant provisions applying to trust company business pursuant to the Financial Services (Jersey) Law 1998 (the “Financial Services Law“) e.g. LGL Trustees Ltd

The Charter: 

 The charter is filed with the Registrar and available for public inspection at the Registry. Certain details must be included in the charter, including but not exclusively, the name of the foundation, objects of the foundation, initial endowment, if applicable.

The Regulations: 

All Jersey foundations must have regulations. The regulations are not filed with the Registrar and not available for public inspection. 

Abridged regulations must also be submitted at the time of incorporation of a foundation with the abridged regulations publicly available. The abridged regulations will not include any information by which a person can be identified. As a result, abridged regulations can be drafted so that they do not identify specific persons, such as the founder, guardian and council members.

The Founder:

The person who instructs the Qualified Member to incorporate the foundation. The founder can be provided with certain rights and powers under the charter or regulations.

The Council:

The powers and duties of the council are set out in the regulations. At all times a Jersey foundation must have a Qualified Member on the council. The role of the council is to administer the foundation and carry out its objects. A council may have one or more members, and if required, the roles and duties of the council members can be tailored in bespoke manner.

The Guardian:

The guardian cannot be a member of the council, unless also the founder or the Qualified Member of the council. The duty of the guardian is to ensure that the council carries out its functions and in this respect the guardian can ask the council to account for the way that they have acted. The guardian can be provided with certain rights and powers such as the right to approve specific actions of the council; or appoint and remove council members.

Annual Confirmation Statement:

A Jersey foundation must file an annual confirmation statement with the Jersey Financial Services Commission (JFSC). The annual confirmation statement confirms the foundations beneficial owner information and significant person information as 1 January. Details of the founder and guardian, whilst provided to the JFSC will not be publicly available. Certain information for significant persons e.g. individual council members will be publicly available.

Why could a Jersey Private Trust Foundation work for you?

  • Effective: A Jersey PTF is managed by its council, in a similar manner as a company is managed by its directors. The roles of the council can be specific and bespoke to fulfil your requirements
  • Peace of mind: A Guardian must be appointed, and this can be a family member or trusted advisor who can hold the power to appoint and remove council members together with the power to approve certain decisions of the council
  • Simple: A Jersey PTF does not require the addition layers that are required with a PTC structure and make the day-to-day running more straightforward and more cost effective!

As is always the case appropriate independent tax and legal advice should be sought prior to the implementation of structuring.

Should you be interested in discussing the use of a Jersey PTF in more detail:

Please connect with >>> Phil Taylor, Client Director

THE AUTHOR

Phil Taylor

01534 846676

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