A new amendment to the island of Jersey’s trust legislation has come into force, which the jurisdiction says is designed to give courts, lawyers and clients a clearer position in the use of such structures.

The amendment incorporates into the Trusts (Jersey) Law 1984 the existing law on mistake and the so called “rule in Hastings-Bass’”, the latter being a legal first within the international trust’s arena, according to a statement from Jersey Finance, the promotional agency for the island’s financial sector.

“The effect of the amendment is to confirm the Royal Court’s ability to provide discretionary relief in a number of trust scenarios, eg where a settlor has made an error in settling assets into trust, or where a trustee has erred in exercising a power, perhaps failing to take into account matters which should have been considered, or acting on incorrect professional advice,” the statement said.

“The ability for the Royal Court to give discretionary relief when a beneficiary finds itself materially prejudiced by a trustee’s decision - made, perhaps, in good faith but unfortunately founded upon erroneous advice - provides a welcome alternative to the uncertainties and costs which surround 'classic' negligence litigation,” Geoff Cook, chief executive, Jersey Finance, said.

“With an estimated £0.4 trillion (around $0.65 trillion) of trust assets under administration in Jersey, this amendment can only serve to further bolster Jersey’s already highly regarded international private wealth offering,” he added.