Protecting The Vulnerable Beneficiary: Guernsey’s Toolkit Beyond Discretionary Trusts

When settlors think about protecting a vulnerable family member, whether a child prone to profligacy, an adult struggling with addiction or an elderly relative suffering cognitive decline, the instinctive response is often to establish a discretionary trust. The trustee is given broad discretion over distributions and the beneficiary receives no more than a hope of benefit. It is a tried and tested tool and for good reason.

But discretionary trusts are not the only instrument in the Guernsey practitioner's armoury. The Trusts (Guernsey) Law 2007 (the Trusts Law) provides a suite of mechanisms, some statutory, some structural, that can be deployed individually or in combination to tailor protection to the specific vulnerability in question. This article highlights those mechanisms, explains how they interact and identifies why Guernsey's offering in this area is more comprehensive than other reputable onshore jurisdictions.