Representation of IQEQ (Jersey) Limited re the B Trust: [2024] JRC 210

The case revolves around the application to vary a family trust governed by Jersey law, with a specific focus on the variation of the exclusion of the Settlor (also the Protector) from the Trust and the potential appointment of the entire Trust fund to him. The original Trustee was Investec Trust (Switzerland) SA, which was replaced by the current Trustee, the Representor, in 2019.

The Trust was established in 2012 by the Settlor to preserve family wealth and provide for future generations, but over time, both the Settlor and his wife were excluded as beneficiaries in 2017 following tax advice. The current application seeks the Court’s approval to reverse one of these exclusions, reinstating the Settlor as a beneficiary, and to approve the Trustee’s decision to distribute the entire Trust fund to him, based on anticipated changes to UK tax laws.

The Trust assets are valued at over £70 million, including a valuable London property and shares in a company. The primary motivation for this application is to avoid UK taxes, including inheritance tax, income tax, and capital gains tax, which could significantly diminish the Trust’s value. The Settlor, who is not UK domiciled, intends to use the assets tax-efficiently for his children and grandchildren, thus benefiting the beneficiaries in a more favourable manner.

The application also discusses the importance of notifying HMRC about the case, a point raised by the legal representatives. Although Advocate Angus argued that HMRC need not be notified in this case as no tax liability is currently due, the Court decided that notice should be given, especially given the long-term tax implications. HMRC, after being notified, chose not to intervene.

The Court’s role is to assess whether the variation is in the best interest of the beneficiaries, particularly the minor and unborn beneficiaries. The variation is deemed necessary to avoid substantial tax consequences and to ensure the future benefit of the family. Despite concerns about potential misuse of the Trust’s assets by the Settlor, the Court found the proposed variation to be in line with the Trust’s original purpose and the best interests of the family.

The Court approved the variation and endorsed the Trustee’s decision, determining that the variation and proposed distribution were both lawful and, in the beneficiaries,’ best interests.

Full Judgement Here