05/06/24

From Features

Trusts and Foundations

In the intricate world of offshore finance, trusts and foundations stand out as pivotal instruments for wealth management, asset protection, and tax efficiency.

Long-term Trends In Trust Law Favour IFCs

Long-term Trends In Trust Law Favour IFCs

Andrew Morriss
Bush School of Government & Public Service and School of Law, Texas A&M University, College Station, Texas, USA

There is a global market for trust law, with jurisdictions competing to be the supplier of the governing law of trusts, as well as the location of the many service providers involved in creating and maintaining a trust. The rewards for the successful competitor include both indirect rewards such as the increased economic activity – lots of lawyers, accountants, investment managers, and other professionals earning and spending money in them – and direct revenue such as income from licencing and other regulatory fees. As IFCs have become ever more agile competitors in this market, they have moved into the driver’s seat in determining trust law’s future.

Three important trends in the long-term evolution of trust law are shifting its centre of gravity from England to the world of international financial centres. First, there is a growing demand for trust law to meet new needs. In particular, the growth in sophistication of IFC clientele to include much more complex matters – both for high-net-worth clients and for business clients – than the older ‘hold assets and cut cheques’ business is increasing the demand for innovation offshore. Over the last few decades, this has put IFCs at the forefront of trust law’s development of new means of solving ever more complicated problems.

Second, part of the means of meeting that demand has been statutory innovations in trust law, from comprehensive trust laws on the Jersey model, to more targeted innovations such as Cayman’s STAR trust legislation. These are enabling significant innovations in trust law to develop. Using collaboratively designed statutes drawing on private sector expertise, IFCs h…