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Recognition of a trust

The Hague Convention describes recognition as the legal treatment given to a trust created under the law selected by its rules.

Meaning in the Hague Convention

The Hague Convention describes recognition of a trust as treating a trust formed under the applicable law as a trust. Its rules first identify which law governs, through a settlor's express or implied choice or, without a choice, the law most closely connected to the trust.[1]

Under the Convention, recognition has a minimum meaning. Trust property is treated as a separate fund, and the trustee may act in a trustee capacity before official persons and in legal proceedings.[1]

The Convention's scope has limits. It applies only to trusts created voluntarily and evidenced in writing, and does not cover preliminary questions about the validity of a will or another act transferring assets to a trustee.[1]

A further limit applies when the law identified by the Convention does not provide for trusts or the relevant category of trust. Also, a state is not bound by the Convention to recognize a trust whose significant elements are more closely connected with states lacking that institution, subject to the Convention's stated exceptions.[1]

Use in Jersey law

Jersey's Trusts Law uses recognition to describe the status of a trust under Jersey law. Subject to that law, it states that a trust is recognized as valid and enforceable.[3]

Jersey law separately identifies the trust's proper law. It can be the law expressed in the trust terms, the law implied by those terms, or the law of the jurisdiction with the closest connection when neither applies. The closest-connection inquiry names administration location, asset location, and trustee residence or business location as factors.[3]

The governing or proper law is a rule for identifying which law applies; recognition concerns how the trust is treated under a legal system. The Convention sets out recognition effects and limits, while Jersey law states its own recognition rule subject to its provisions.[1][3]

Questions and answers

What does recognition mean in the Hague Convention?

The Convention treats a trust formed under the law identified by its rules as a trust. At minimum, trust property is a separate fund and the trustee may act as trustee before official persons and in legal proceedings.[1]

How does the Convention identify the law governing a trust?

It gives effect to the settlor's express or implied choice when the chosen law provides for the trust category. Without an effective choice, it uses the law with the closest connection.[1]

Does the Convention cover every trust?

Its scope is limited to trusts created voluntarily and evidenced in writing. It also does not apply to preliminary questions about the validity of wills or other acts transferring assets to a trustee.[1]

What minimum effects does recognition have under the Convention?

The trust property constitutes a separate fund. The trustee may sue or be sued in that capacity and may act in that capacity before a notary or another official person.[1]

How does Jersey law describe recognition?

Subject to the Trusts Law, Jersey recognizes a trust as valid and enforceable. The law separately sets out how to identify its proper law.[3]

When is a state not bound by the Convention to recognize a trust?

The Convention says a state is not bound when the trust's significant elements are more closely connected with states that do not have the trust institution or relevant category. It excludes the choice of applicable law, place of administration, and trustee's habitual residence from that significant-elements test.[1]

  • Proper law of a trust: The Jersey Trusts Law defines proper law as the jurisdiction's law expressed or implied in trust terms, or most closely connected to the trust when created.
  • Trust: The Hague Convention describes a trust as a relationship in which a settlor places assets under a trustee's control for beneficiaries or a specified purpose.
  • Corporate trustee: A corporate trustee is a corporation under Jersey law. The law explains how it acts for a trust and relates to an individual trustee or trust corporation.
Sources and data notes
  1. HCCH, 1985 Hague Trusts Convention. https://www.hcch.net/en/instruments/conventions/full-text/?cid=59. Retrieved .
  2. Internal Revenue Service, 26 CFR 301.7701-4. https://www.ecfr.gov/current/title-26/section-301.7701-4. Retrieved .
  3. Jersey Legal Information Board, Trusts (Jersey) Law 1984. https://jerseylaw.je/laws/current/l_11_1984. Retrieved .
  4. Cayman Islands Legislature, Trusts Act (2021 Revision). https://legislation.gov.ky/cms/images/LEGISLATION/PRINCIPAL/1967/1967-0006/1967-0006_2021%20Revision.pdf. Retrieved .
  5. Legislature of Bermuda, Trusts (Special Provisions) Act 1989. https://bermuda.fm/legislation/1591. Retrieved .

Dates in this block record when each source was read for this page.