The Residence of a Trust after Garron and Smallwood

The established view has long been that a trust is resident in the jurisdiction where the trustee is resident. This briefing note discusses recent international developments in the form of two recent cases, one in Canada and one in the UK, which have introduced concepts that we are more used to in the context of the determination of corporate residence. Both judgements emanate from non-Channel Island jurisdictions. Neither Guernsey nor Jersey Courts would be bound by these decisions but would be likely to find both decisions of persuasive authority should our Courts be called upon to consider a challenge to the residence of a trust by a revenue authority.

Although we express no view on whether or not these judgements might hold any sway in foreign jurisdictions, the general approach adopted in both these cases should nevertheless be seen as illustrative of recent judicial trends and thinking and as such should serve as a reminder of the need for trustees to maintain control effectively and demonstrably over the affairs of their trusts.

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