masthead picture for tqr issue 3 2023

Trusts on tour

Thursday, 08 December 2022

Welcome to the final issue of the Trust Quarterly Review for 2022. The geographical coverage is as diverse as the underlying subject matter: we are travelling from the British Virgin Islands to England and Wales, via Germany, Israel and New Zealand.

Simon Hurry, Kellyann Ozouf and Matt Gilley kick off this issue with an overview of the very significant judgment of the UK Privy Council on the insolvency of trusts. This was an appeal from the respective Jersey and Guernsey Courts of Appeal, relating to Jersey-law-governed trusts. The authors focus on the Jersey appeal. The legal and practical implications are highly significant and go to the heart of a trustee’s ability to adequately recover under its indemnity from a trust fund while in office and after retirement.

Daniel Paserman TEP, Inbar Barak-Bilu TEP and Yoad Cohavy follow with a review of the Supreme Court of Israel’s judgment in Samuel Galis v Director of Land Appreciation Tax Tel-Aviv. Although a number of open questions remain, the case primarily considers whether transfer of Israeli real estate to a trust is subject to local taxes. There is much complexity, but the authors conclude that the case leaves open the use of trusts over Israeli real estate in the context of succession planning.

We move on to the extremely sensitive and (caveat lector) upsetting, but important, decisions of the New Zealand Court of Appeal and the High Court of New Zealand. John Brown TEP asks: can equity provide a remedy for adult children of an abusive parent who transfers assets to a trust before death? As the author notes, the article includes details regarding the sexual and physical abuse of children. Reader discretion is advised.

One of the great enduring problems for tax and succession lawyers alike is how different types of entity or legal relationship are treated in a foreign jurisdiction, where they have no domestic existence or equivalent. Jörgchristian Klette and Daniel Schüttpelz discuss the particular problem of the taxation of trusts in Germany and how trusts must be analysed for legal and tax purposes in light of a 2021 decision of the German Federal Fiscal Court.

Christopher McKenzie TEP then provides an update on recent innovations in British Virgin Islands trusts and estate law, including provisions relating to the variation of trusts; firewall provisions; allowing the flawed exercise of a fiduciary power to be set aside; and updating local reserved powers provisions.

We finish with Miranda Allardice’s review of The Family Court Practice 2022 (Red Book), edited by the Right Honourable Lady Black of Derwent and others. As the reviewer notes, it is important for private client lawyers to understand the core principles of family law, not least where matrimonial principles and trusts clash. The book is broad: in the words of the reviewer, ‘[t]his brief review will illustrate the breadth of its remit and value as the first port of call for a synopsis of the relevant law’.

We wish our readers the very best for the upcoming festive season, and a peaceful end to the year.

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The Editors

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