Will Trusts: flexibility in personal succession planning

Careful succession planning, supported by appropriate professional advice, can help ensure that your affairs are structured in a way that reflects your wishes and provides for those you leave behind. One option that may be considered as part of that planning is a Will Trust. 

This briefing explains, in general terms, what a Will Trust is and how it may be used in a Jersey estate planning context. 

What is a Will Trust? 

A Will enables you to set out how your estate is to be dealt with on death. In some cases, rather than enabling assets to pass outright to beneficiaries, a Will may provide for some or all of your estate to be held on trust. 

A Will Trust is therefore a trust created by the terms of a Will, which takes effect on death. In broad terms, once the estate has been administered in accordance with your Will and applicable law, the relevant assets are transferred to the trustees of your Will Trust to be held on the terms set out in the Will. 

The trustees then hold and administer those assets for the benefit of the beneficiaries, or a class of beneficiaries, in accordance with the terms of your trust and their duties under applicable law. 

This can allow your assets to be retained within a trust structure after death, rather than being distributed immediately and absolutely to beneficiaries. 

What can a Will Trust look like? 

Will Trusts can take a number of different forms, depending on your objectives, family circumstances and the nature of the assets involved. 

One commonly used form is a discretionary trust. Under a discretionary trust, the trustees are typically given power to determine whether, when and to what extent distributions of income and/or capital should be made among a class of beneficiaries. This can provide flexibility where future circumstances cannot be predicted with certainty. 

Other trust structures may also be appropriate depending on your intended outcome, for example, where you wish to confer a more defined or limited interest on a particular beneficiary. The most suitable structure will depend on the particular facts. 

Why might a Will Trust be used? 

A Will Trust may be considered when you would like to introduce an additional degree of control, flexibility or asset protection into your succession planning. 

Depending on the structure adopted and the surrounding circumstances, potential advantages may include: 

• flexibility as to the timing and extent of benefit received by beneficiaries 
• a framework for managing assets for minor or vulnerable beneficiaries 
• protection against the risks associated with outright inheritance 
• continuity in the management of assets after death 
• a mechanism for accommodating changing family circumstances 

Whether a Will Trust is appropriate will depend on the size and nature of the estate, the jurisdictional context, the proposed beneficiaries and your objectives. 

Who should act as trustees? 

Your choice of trustee is an important part of establishing any trust structure. A trustee will assume responsibility for holding, administering and distributing the trust assets in accordance with the terms of the trust and applicable law. 

Depending on the circumstances, you may appoint: 

• an individual, such as a family member or trusted friend 
• a professional trustee 
• a combination of the two 

Professional trustees may be particularly suitable where the assets are complex, the proposed trust is likely to continue for a significant period, there is a risk of family disagreement, or an independent decision-maker is desirable. 

In some structures, it may also be appropriate to include the office of protector, with specified powers under the terms of the trust. Whether that is suitable will depend on the drafting and the intended governance of the trust. 

What are the trustees’ responsibilities? 

Trustees are fiduciaries and must exercise their powers and perform their duties in accordance with the terms of the trust and the requirements of Jersey law. 

In general terms, trustees must: 

• act in good faith 
• act in the best interests of the beneficiaries as a whole, in accordance with the terms and purpose of the trust 
• take relevant matters into account and disregard irrelevant matters when exercising discretionary powers 
• act impartially as between beneficiaries, where the nature of the trust so requires 
• safeguard and properly administer trust assets 
• avoid unauthorised conflicts and profits 

In Jersey, trustees’ duties and powers are governed principally by the Trusts (Jersey) Law 1984, as amended, together with the terms of the trust instrument and applicable case law. The Royal Court of Jersey has supervisory jurisdiction in relation to Jersey trusts. 

Letter of wishes 

Where a discretionary Will Trust is used, it is common for you, as the testator, to prepare a letter of wishes for the trustees. 

A letter of wishes is not usually legally binding, but it may provide guidance to the trustees as to how you would wish them to exercise their discretions. For example, it may explain the reasons for the trust structure, identify matters the trustees may wish to take into account, or set out the your views as to the needs or circumstances of particular beneficiaries. 

A letter of wishes can usually be updated during your lifetime without the formalities required for amending the Will itself, although care should be taken to ensure it remains consistent with the Will and the intended trust structure. 

Are Will Trusts always necessary? 

No, a Will Trust is not necessary in every case. For some individuals, a straightforward Will providing for outright gifts may be entirely appropriate. 

However, where flexibility, control over timing of benefit, protection of beneficiaries or longer-term asset management are important considerations, a Will Trust may merit consideration as part of your overall estate planning exercise. 

The suitability of a Will Trust should always be assessed in light of your circumstances, the nature and location of the assets, any forced heirship or conflict of laws issues, and the likely practical and administrative consequences of the proposed structure. 

Jersey considerations 

Where Jersey law is relevant, careful attention should be given to: 

• the domicile and residence of the testator 
• the situs of the assets 
• the law governing the Will and succession to the estate 
• the intended governing law of the trust 
• tax considerations in Jersey and any other relevant jurisdiction 
• the practical administration of the estate and trust following death 

These issues can affect both the effectiveness of the Will Trust and its suitability in the wider succession planning context. 

How Ogier can help 

We can advise on whether a Will Trust is appropriate in your circumstances and, if so, on the most suitable structure from a Jersey law perspective. We can also assist with Will drafting, the establishment of appropriate trust provisions, and related succession planning advice. 

Reach out to a member of our team to learn more. 

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Disclaimer

This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.

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