Babbé LLP
Trust Law Amendments 2026 Babbe LLP

Guernsey Trust Law Reform: Detailed Overview of the 2026 Amendments

4 Min Read

Proposed Amendments to Guernsey Trust Law

A Guernsey Bar Sub‑Committee has completed a comprehensive review of the Trusts (Guernsey) Law 2007, resulting in a series of proposed amendments which were approved in principle by the States of Guernsey on 20 May 2026. Legislation will now be drafted which, once approved, will make the changes to the Trusts Law that have been proposed.

The proposals aim to address issues highlighted in case law and reinforce Guernsey’s status as a jurisdiction of choice for high-value trust and fiduciary services.

1. Reserved Powers (Section 15) – New Fiduciary Presumption

Modern Guernsey trusts frequently include reserved powers for settlors or third‑parties, including protectors. Under the current law, Section 15(2)(b) presumes that these power holders do not owe fiduciary duties unless expressly stated.

The Sub‑Committee proposes reversing this presumption so that:

  • Reserved powers are presumed to be fiduciary, unless the trust instrument states otherwise.
  • Section 32 will be aligned to remove inconsistencies around consultative or veto powers.

This change reflects international norms and provides greater certainty for trustees, protectors and advisers operating in Guernsey.

2. Minimum Number of Trustees & Trustee Incapacity

To improve administrative efficiency:

  • Section 17, which deals with the minimum number of trustees of a trust required, will be amended to allow a single trustee, unless the terms of the trust require more.
  • Section 20 will provide for automatic removal of trustees who become mentally incapable, reducing the need for court applications.

These changes will address practical challenges faced by Guernsey fiduciaries and align the island with other leading trust jurisdictions.

3. Professional Trustee Remuneration

Currently, trustees may only be paid if expressly authorised by the terms of the trust. The reforms will introduce a default right for professional regulated trustees to receive reasonable remuneration, subject to trust terms or beneficiary agreement.

This will avoid unnecessary disputes and reflects commercial reality in Guernsey’s trust industry.

4. Trustee Liability, Liens & Limitation Periods

Key updates include:

  • Clarifying trustees’ entitlement to reasonable security for liabilities before transferring trust property.
  • Amending Section 44 so that statutory liens do not override earlier security arrangements or lender security.
  • Updating prescription periods so they run from the earlier of:
    • delivery of complete trust accounts (provided that they are complete and accurate), or
    • the aggrieved beneficiary’s knowledge of the breach.

These changes enhance certainty for trustees, beneficiaries and lenders operating in Guernsey.

5. Transactions Between Trusts – Exception to the Two‑Party Rule

Guernsey trustees often administer multiple related trusts. The reforms will allow a trustee to contract with itself as trustee of another trust, subject to safeguards.

This will resolve long‑standing issues caused by the principle that a person cannot contract with itself, even if acting in different capacities.

6. Powers of Attorney

The current three‑year limit on powers of attorney will be removed, improving flexibility for investment and transactional activity while retaining safeguards against wholesale delegation.

7. Termination of Trusts – Clarifying Section 53(3)

Section 53(3) will be amended to restore the traditional position that beneficiaries may only compel termination of a trust where the class of beneficiaries is closed, so that a power of trustees, or another party, to add further beneficiaries will prevent the current beneficiaries from forcing termination.

This provides clarity for Guernsey trustees and advisers.

8. Expanded Royal Court Powers for Variation

The reforms will significantly expand the Royal Court’s ability to:

  • Approve variations of beneficial interests.
  • Approve transactions without unanimous beneficiary consent.

This can be particularly useful where:

  • A single beneficiary blocks a beneficial arrangement; or
  • Obtaining universal consent would be disproportionate.

The Court will retain safeguards to protect core trust principles.

9. Hastings‑Bass

Guernsey intends to restore the more flexible version of the Hastings‑Bass rule so that:

  • A breach of fiduciary duty will not be required for the Court to set aside a flawed fiduciary decision.
  • The Court may declare such decisions void, voidable, or effective on modified terms.

This strengthens Guernsey’s trust remedial framework and aligns it with other offshore jurisdictions.

10. Privacy of Proceedings & ADR/Arbitration

The reforms will introduce:

  • Express statutory provision for private hearings and anonymisation.
  • Removal of the requirement for ADR settlements to be signed by all parties.
  • Expansion of arbitration to include internal trust disputes.
  • Recognition of arbitration clauses in trust instruments (subject to court oversight.

Conclusion

The approved changes, once implemented, represent a welcome updating of the Trusts Law to bring it up to date and deal with a number of issues which have given rise to difficulties since the Trusts Law was introduced.

For further information, please contact Managing Partner, Nick Robison.

Share this blog post