"Asset Protection" Trusts In The Channel Islands

Introduction

The term "Asset Protection Trust" can be slightly confusing because no type of trust under English, Jersey or Guernsey law is specifically designated an "Asset Protection Trust" (as if it were a particular type of trust). The purpose of every trust is to protect assets, though the reasons why assets need to be protected will vary from one trust to the next.

However, the term "Asset Protection Trusts" has developed as a term of art, and a number of jurisdictions, notably the Cayman Islands, Bahamas, Anguilla, and the Cook Islands have enacted debtor friendly legislation and are known as "asset protection" jurisdictions. The primary purpose of such trusts is to protect assets against claims made by creditors and such a trust is used for persons embarking on a risky business venture or persons asked to give personal guarantees relating to the activities of that business. This note considers the extent to which Jersey and Guernsey trusts can be used in