Amendments to Guernsey’s trusts law

Guernsey’s Committee for Economic Development has proposed beneficial and wide-ranging reforms to Guernsey’s trusts legislation, which will further bolster Guernsey’s reputation as a jurisdiction of choice for trusts.

Introduction

Since it came into force in March 2008, the Trusts (Guernsey) Law, 2007 (the Law) has provided a comprehensive framework for Guernsey trusts. The Committee for Economic Development’s proposed amendments – the first substantial reforms since the Law came into effect – make improvements which will further enhance Guernsey’s offering in the trusts and private wealth sphere.

The amendments, which represent a fine-tuning rather than a wholescale reform of the regime, are set out in a Policy Letter dated 20 March 2026, which is tabled to be heard before the States of Deliberation’s sitting on 20 May 2026. The changes of particular interest are dealt with below.

Minimum number of trustees

Section 17 of the Law will be amended to provide that that the minimum number of trustees shall be one, except where the terms of the trust expressly provide otherwise. The current requirements are for a minimum number of two trustees except in specified circumstances including where a corporate trustee resident in Guernsey is acting or only one trustee was originally appointed. This change will rectify potential problems caused by the current requirements, for example where one of two trustees ceases to be a trustee and another trustee cannot be appointed immediately.

Trustee removal and death

There is currently no provision for the automatic removal of a trustee due to mental incapacity or unfitness to act, which causes administrative difficulties, and expense, should an application to court be required. Section 20 is to be amended to provide for the automatic removal of a trustee from office when they lack the necessary capacity.

Mental incapacity of powerholders is an increasing problem and this amendment will provide a helpful simplification in what can be an already difficult situation.

Although it is clear, as a matter of Guernsey law, that the personal appointment of a trustee fails upon that person’s death, the Committee suggests that the Law could helpfully be amended to provide greater clarity around the further consequences of the death, or removal, of a trustee, including provisions relating to the appointment of new trustees and the vesting of trust assets, using statutory provisions from England and Wales with necessary adaptations.

This will provide useful certainty around the processes to be followed upon the death of a trustee.

Remuneration

Section 35(1) of the Law provides that a trustee is not entitled to remuneration for their services, unless this is authorised by (a) the terms of the trust, (b) the consent in writing of every beneficiary, or (c) an order of the Royal Court. This is to be reversed for professional trustees. The Law would provide that a professional regulated trustee is entitled to receive reasonable remuneration out of trust property for acting as a trustee after the date of the amendment, subject to the terms of the trust, any agreement in writing between the trustee and every beneficiary, or any order of the Royal Court.

This will avoid unnecessary administration and litigation, often at the expense of the trust, to clarify the professional regulated trustee’s entitlement to renumeration for their services, thus enhancing efficiency in trust administration.

Trustee contracting with itself

The combined effect of the ‘no conflict’, ‘self-dealing’ and ‘genuine transaction’ common law rules is that currently a professional trustee, who may act as trustee for multiple trusts, cannot contract with itself, even where it wishes to do so in the capacity of trustee of another trust.  The Committee proposes that section 41 of the Law should be amended to permit a person acting in the capacity of trustee to enter into a contract or other transaction with itself in the capacity as a trustee of one or more other trusts, subject to any necessary safeguards.

This will put Guernsey on an even playing field with Jersey and resolve many issues for trustees.

The rule in Saunders v Vautier

Section 53(3) of the Law addresses the right of the beneficiaries of a trust, where all are in existence and have been ascertained, and none is a minor or a person under a legal disability, to require the trustees to terminate the trust and distribute the trust property among them.  This ultimately derived from the well-known English trusts law principle from the case of Saunders v Vautier ([1841] EWHC Ch J82.

In Rusnano Capital AG (In liquidation) v Molard International (PTC) Ltd and Ors [2019] GRC011, and confirmed on appeal, it was held that section 53(3) applied even where there was a power to add further beneficiaries, which had not been exercised.

This went further than the rule in Saunders v Vautier and the Committee proposes to amend section 53(3) to ensure that it does not expand upon the scope of the rule in this way.  Accordingly, section 53(3) would be amended so that it only applies where the class of beneficiaries is closed (ie there is no power to add new beneficiaries) and the beneficiaries can therefore demonstrate an absolute, vested and indefeasible interest in the trust property.

This is a welcome development in the interests of certainty and to ensure that the same, established principles apply in Guernsey as in England and Wales and other common law jurisdictions.

Variation of trusts on behalf of minors, etc

Section 57 of the Law provides that the Royal Court may approve applications made by any of the persons listed in section 69(2) of the Law for variation of trusts on behalf of minors, persons under a legal disability, persons unborn, or potential future beneficiaries without leave of the Royal Court. Applications on behalf of any other person require leave of the Royal Court. It is proposed to add a new category of person in respect of who leave of the Royal Court is not required, namely a person who is able to agree to the variation, but for whom there may be adverse consequences of doing so.

Powers of the Royal Court to vary beneficial interests under a trust and approve particular transactions

Presently the variation of beneficial interests can be achieved only by way of an ‘arrangement‘ with the consent of all the beneficiaries, with the court only having a power to give consent to such an arrangement on behalf of those persons referred to in section 57. The court’s power to approve a transaction under section 58 is limited to giving trustees powers ‘in the management or administration of the trust‘ and does not permit the variation of beneficial interests in the trust property per se.

The proposals amend the Law to clarify and expand the ability of the court to make amendments to a trust, in appropriate cases, without the beneficiaries being made parties and without being required to give their consent, subject to appropriate safeguards.

This will mean that the powers of the court to give consent to variations of the beneficial interests more generally, under the Trusts Law, will be far wider and will permit, for example, the court to vary a trust where a variation is for the benefit of the beneficiaries as a whole, but one uncooperative beneficiary has refused consent or where the cost of obtaining the consent of all the beneficiaries would be disproportionate.

This amendment has the potential to resolve deadlock and mitigate the impact of obstructive or impractical beneficiary consent requirements.  It should avoid the problem of a difficult beneficiary withholding consent to an arrangement which is clearly to the benefit of the class as a whole.  The involvement of the court will ensure that safeguards are in place to avoid underlining foundational trust principles.

Hastings-Bass applications

The rule in the case of Hastings-Bass is a principle of English trusts law which has been recognised by the Royal Court as applying in Guernsey. The rule was, traditionally, considered to allow a court to set aside the exercise of a trustee discretion where its effect was different from that intended, and the trustees would not have acted as they did, had they not failed to take account of something relevant or taken into account something irrelevant.  However, in a judgment of the UK Supreme Court in 2013 (Pitt v Holt / Futter v HMRC [2013] UKSC 26), the rule was reformulated such that the inadequate deliberations of the trustees must have been sufficiently serious as to amount to a breach of fiduciary duty before the court will intervene.

A number of jurisdictions, including Jersey, have enacted legislative provisions to reinstate the rule as it had been understood before the Supreme Court decision.

The Committee proposes to amend the Law to reinstate the rule as it had been understood before the Supreme Court decision, to the effect that it is not necessary for there to have been a breach of fiduciary duty on the part of the trustees, in order for the court to have the power to set aside the exercise of a fiduciary power in circumstances where there was inadequate consideration by the holder of the power within the meaning of the rule in Hastings-Bass.

It is also proposed to provide that the exercise of a fiduciary power in such circumstances may be declared by the court to be void, or of such effect as the court may determine, or of no effect from the time of its exercise.

These amendments will make it easier to set aside an exercise of a trustee discretion where there have been unintended consequences without having to establish breach of trustee duty.

Alternative dispute resolution (ADR)

Section 63 of the Law provides for settlement of actions against trustees by ADR to be binding on beneficiaries in certain circumstances.  Section 63(1)(c) requires ADR to result in a settlement which is recorded in a document signed by, or on behalf of, all parties in order to be binding. Not all forms of ADR will result in a document signed in this way, notably evaluation, adjudication, expert determination or arbitration. The Committee therefore proposes that section 63 should be amended to remove the requirement in section 63(1)(c).

At present, section 63 only provides for binding settlement by ADR of any claim against a trustee founded on breach of trust. The Committee proposes to increase the types of disputes which may be determined by way of arbitration, to include internal trust disputes between trustees, beneficiaries and/or other power holders.

The Committee recommends that the Trusts Law and the Arbitration (Guernsey) Law, 2016 be amended to provide a comprehensive as possible code for the arbitration of trusts disputes, with such ancillary amendments as may be necessary.  In particular, it is recommended that an arbitration clause in the terms of a trust should, subject to any order of the Royal Court to the contrary, be deemed to be an arbitration agreement for the purposes of the Arbitration Law, allowing arbitration to be used where such a clause is included in the trust document. However, the class of disputes that may be subject to such an arbitration clause would not extend to disputes involving third parties, as they are not parties to the trust and should not have their right of access to the court excluded.

These changes are an important step in enhancing Guernsey’s appeal for resolving trust disputes. Guernsey has a great opportunity to position itself as an arbitration-friendly trust jurisdiction.

General powers of the Royal Court

It is proposed that section 69 of the Law, which concerns the general powers of the Royal Court in respect of applications concerning trusts, be amended to remove the current requirement for a ‘trust official’ to obtain the leave of the Court to make an application under this section.

Private proceedings

Whilst it is common, upon the application of the parties, for certain categories of proceedings concerning the administration or interpretation of trusts to be heard in private, the starting point is open justice. The Committee proposes to update the Law to expressly permit the Royal Court to make provision in respect of private hearings and ancillary matters (such as anonymisation of the names of parties, the name of the trust and the details of trust assets) in Rules of Court. This will provide a pathway for greater certainty to be provided and for cost and time to be saved, in appropriate cases, while allowing the Royal Court to retain control over practice and procedure.

This is a welcome development. Although currently the court usually orders that the proceedings be heard in private, there needs to be an application. This proposed change will remove this administrative burden, reduce costs and give comfort to the parties.

Conclusion

The proposed reforms represent a progressive step that will enhance the jurisdiction’s appeal as a premier international trusts centre. By refining and modernising existing provisions, these changes are expected to provide greater clarity, flexibility and certainty for trustees, settlors and beneficiaries alike – strengthening Guernsey’s reputation for legal innovation and stability.