Fiduchi Generic Header Image

Jargon Buster -
Glossary of Terms

'Ademption'

When an item in a will no longer forms part of the estate at the time of death.

'Administrator'

The person(s) appointed to distribute the estate if someone dies without a valid will or without appointing executors, or if the appointed executor is unable or unwilling to act.

'Appointor'

A person who has the power to remove a trustee and appoint a new one. Although you have a choice whether to appoint an appointor to your trust, you should consider the benefit of having one to cater for situations such as the death or insolvency of a trustee. The appointor may be the settlor, an existing trustee, a named beneficiary or any other third party.

'Arbiter'

The person appointed to judge or decide the result of a dispute.

'Asset'

An item, owned by an individual, which may make up part of an inheritance or be used to pay debts.

'Beneficiary' or 'Beneficiaries'

Person(s) for whose benefit the trust is created. They may be named and identified in the trust instrument or described by reference to a class of beneficiaries. The settlor may also be a beneficiary. A beneficiary has an equitable ownership interest in the trust property which allows him to enjoy the property, or its income, according to the terms of the trust.

'Capital'

Monies or assets that are used to generate income or held as an investment.

'Capital Gains Tax'

A tax on the profit made when you sell or give away something that has increased in value.

'Discretionary Trust'

This is the most commonly used trust, providing the trustees with complete discretion to manage the assets and income in accordance with the beneficiaries’ best interests.

'Eligible Beneficiaries'

Defined by their relationship to the named beneficiaries. The discretionary trust deed's schedule may contain a long and all-encompassing list of 'classes or eligible beneficiaries'. In a discretionary (family) trust, the trustee may distribute at its discretion trust income or other trust property either to named beneficiaries or eligible beneficiaries.

'Family Trust'

A trust, usually a discretionary trust, established for the benefit of a family group.

'Fiduciary'

A person who has responsibility to take care of someone else's money or assets in a suitable way.

'Gifting'

The transfer of asset without consideration.

'Interest in Possession Trust'

This type of trust may be used in circumstances where there is a desire by the settlor to preserve the capital of a fund for certain beneficiaries, but to permit other beneficiaries to receive the income arising from the assets. The trustees must distribute the income earned in the trust to those beneficiaries with a specified right to receive it, but retain discretion over the capital.

A typical example when this type of trust is used is when a settlor wants his spouse to take benefit from the use of the family house for the remainder of her life and for the children to take benefit after she dies.

'Memorandum of Wishes (also called Letter of Wishes)'

A non-binding document prepared by the Settlor establishing their wishes in respect of the administration of a trust. This document usually belongs to the trustees personally and not the trust.

'Minute'

A document recording the operation or administration of a trust.

'Minute Book'

The collection of minutes resolutions.

'Perpetuity Period'

This means the maximum term of the trust (the period for how long it exists). Under Jersey Law, unless its terms provide otherwise, a trust may continue in existence for an unlimited period. No rule against perpetuities or excessive accumulations shall apply to a trust or to any advancement, appointment, payment or application of assets from a trust. Unless stated in the terms of a trust with a perpetuity period, any advancement, appointment, payment or application of assets from that trust to another trust shall be valid even if that other trust may continue after the date by which the first trust must terminate.

‘Protector’

The role of the protector is to oversee the trustees to ensure that they are managing the trust fund appropriately and in accordance with the trust deed. The protector is usually nominated by the settlor and is often a relative, close friend or a trusted adviser.

Where a protector is appointed, the trust instrument will specify the type of transactions that cannot be carried out by the trustee without first receiving the protector’s consent. Typically, protector powers are limited to the approval of distributions, changes to the beneficiaries and changing of the trustees.

'Purpose Trusts'

These are trusts that are set up for a defined purpose as opposed to being set up to benefit specific beneficiaries or charities. These trusts can be used in any number of ways and can be applied to private family trusts as well as to international finance transactions or trusts used for social benefit projects. These trusts require the appointment of an ‘enforcer’, whose duty it is to enforce the trust in relation to the stated purpose but otherwise, they have essentially the same characteristics as all other Jersey trusts.

'Reserved Powers Trusts'

A reserved powers trust allows a third party to the trust (usually but not necessarily the settlor) to retain certain powers in respect of the trust. These powers may allow the power holder to give binding instructions to the trustee over particular aspects of the trust, such as how the trust’s assets are invested or who may benefit from the trust and in what circumstances. Trusts of this type offer flexibility and can be attractive to settlors from jurisdictions unfamiliar with the trust concept, but care must be taken to ensure that the reservation of any particular power does not give rise to any adverse tax or legal consequences.

'Resettlement'

A process pursuant to the trust deed where the trustees establish a new trust for the benefit of a beneficiary or beneficiaries of the existing trust.

'Resolution'

The record of a trustee decision.

'Settlement'

A trust in circumstances where a person known as a settlor transfers his property to a trustee to be held on trust in accordance with the arrangements set out in the settlement. 

'Settlor'

The person who gives the assets to the trustee to hold them for the benefit of the trust's beneficiaries on the terms and conditions set out in the trust deed. The settlor executes the trust deed and then, generally, has no further involvement in the trust.

It is advisable that the settlor of a discretionary trust be an independent person. A settlor will often be a family friend or a solicitor or an accountant who will not be a beneficiary or a trustee.

'Spouse'

A person living with the second person as his or her spouse on a permanent and bona fide domestic basis even though they are not legally married.

'Trust'

A legal relationship that exists where a person (known as the trustee) holds property (of which he is not the absolute owner) for the benefit of any person(s) (known as a beneficiary or beneficiaries) or permissible purpose(s) which not solely for the benefit of the trustee. A settlement is a form of trust. 

'Trust Deed'

A legal document or documents that set and establish the terms of the trust.

'Trust Property'

Property or assets for the time being held in trust.

'Trustee'

A trustee(s) is a person(s) who holds trust property for beneficiaries of a trust or for permissible purposes. The initial trustee(s) are appointed by the settlor. They receive legal title to the trust property when the settlor creates and constitutes the trust.

In managing and disposing the assets of the trust, the trustee(s) have a fiduciary duty to always act in the best interests of the beneficiaries and a legal obligation to act within the terms of the trust instrument and trust law.

It is common for the settlor to express his wishes to the trustees regarding the management and/or the disposal of the assets, usually in a letter of wishes. The trustees can refer to the settlor’s wishes for guidance when making decisions regarding the trust assets.

When using offshore trusts, the trustee will usually reside and carry on trust business from within the offshore jurisdiction. The trustee will typically be a corporate vehicle (a “trust company”), which is associated with a professional organisation such as a bank, legal firm or accountancy practice.

'Unit'

A unit in the unit trust. Rights to income, rules and restrictions attach to units and are described in the unit trust deed.

'Unit Holder'

A person who is registered as a unit holder of an ordinary unit or an income unit at the relevant time, either separately or jointly.

'Unit Trust'

In the UK, a fund in which you buy units (= shares). This money is then put into a range of investments, etc., and profits are paid in relation to the number of unitsthat you own. Collective investments such as unit trusts are ideal products for investment on behalf of a child.

'Vesting'

The transfer of the trust assets to a beneficiary or beneficiaries in accordance with the trust deed.

'Vesting Date'

The date defined in the trust deed when the trust ends. The standard vesting date is 80 years from the commencement of a trust.

'The Founder'

Heir agent or lawyer. There is no requirement for the foundation to be endowed with assets when it is initiated, and the provider of any future additions of assets does not become a founder.

'Qualified Person'

A person registered under the Financial Services (Jersey) Law 1998 to carry on a trust business who applies to the Registrar for incorporation of a foundation.    

'Guardian'

The guardian may share with the foundation council the responsibility for the control of the foundation and they must act in good faith and the best interests of the beneficiaries. Overall the role is supervisory to ensure the foundation council follow the requirements of the charter and regulations. The founder can also be the guardian.

'Beneficiaries'

The objects of a foundation may be to benefit a person or class of persons, or the regulations may prescribe for discretionary appointment by the foundation council. A beneficiary has no interest in the foundation’s assets until they are distributed even if the constitutional documents specify the beneficiary by name and his entitlement. Beneficiaries are not entitled to receive information unless the foundation documents provide otherwise. If a beneficiary becomes entitled to a benefit under the charter or the regulations and the benefit is not provided, the beneficiary may seek an order of the Royal Court ordering the foundation to give the benefit. A founder can be a beneficiary.

'Foundation Council'

The council must consist of one or more members (individuals or corporate bodies) one of which must be a qualified person (the qualified member). It has powers of management similar to the powers of a board of directors of a company. The members of the Council owe their fiduciary duty to the foundation itself. The founder can be a member of the foundation council.

'The Charter'

The charter is a public document. It specifies the name, the objects for which it has been established (which may be charitable, non-charitable or both), details of how it will be endowed, and details of it's winding up if known. It may contain further information regarding beneficiaries and purpose but to preserve confidentiality, it may instead refer to the regulations.  

'The Regulations'

This document is private and is the equivalent of a company’s articles of association. The regulations must establish the council to administer the assets and set out how decisions are to be made.

'Admiralty Law'

A branch of law that regulates commerce and navigation on the seas in the form of shipping and trade.  The laws and regulations that govern shipping and trade and both international and domestic in nature.

'Alternative Compliance Scheme (ACS)'

Alternative Compliance Scheme at the UK Ship Register is whereby the survey and certification process is streamlined by minimising duplication of effort with the classification societies. ACS allows the classification society to perform all statutory surveys required under SOLAS, MARPOL and load line conventions, with the exception of ISM, MLC ISPS audits) without a formal appointment by the UK Ship Register. This allows the MCA to survey/audit the human element aspects of a ships operations.

'Bareboat Charter'

Also known as a demise charter, it is an arrangement for the chartering or hiring of a ship whereby no crew or provisions are included as part of the agreement.

'Base Charter Rate'

The rate the charterer pays on a charter for the yacht and crew. The base rate does not typically include provisioning or other expenses such as food, fuel, dockage and tip.

'Certificate of Competency (CoC)'

A form of licence every mariner is granted to enable them to work on ships. The certificate ensures the person has sufficient knowledge and skills to sail on ocean going vessels.

'Charter Yacht Broker Association (CYBA)'

One of the primary professional organisations for reputable charter brokers.

'Classification Society'

Organisations that establish and apply technical standards in relation to the design, construction and survey of ships.  The main class societies in yachting are the American Bureau of Shipping, Bureau Veritas, Det Norske Veritas, Germanischer Lloyd, Lloyd’s Register and RINA.  

'Continuous synopsis record (CSR)'

It is a special measure under SOLAS for enhancing maritime security at sea. All passenger and cargo ships of 500 GT and above must have this on board.

'Emergency Position Indicating Radio Beacon (EPIRB)'

A distress beacon that is triggered during an accident which is detected by satellites. The system is monitored by an international consortium of rescue services.

'Full Registration'

Proves the title, ownership and nationality of a vessel worldwide.

'Global Maritime Distress and Safety System (GMDSS)'

An international system which uses terrestrial and satellite technology and ship-board radio systems.  It ensures rapid alerting of shore-based rescue in the event of an emergency.

'Gross Tonnage (GT)'

This is a key issue, not only as a reference for the registration fees applied by the different flag administrations but also because it determines whether an international convention rather than a particular safety standard applies to a yacht.

'International Labour Standards on Seafarers (ILO)'

A United Nations agency whose mandate is to advance social justice and promote decent working environments.

'International Maritime Organisation (IMO)' 

A specialised agency of the United Nations that is responsible for measures to improve the safety and security of international shipping and to prevent marine pollution from ships.

'International Organisation for Standardisation (ISO)'

Develops new standards for the shipping industry that will help prevent shipwrecks and make maritime pollution clean-up operations more effective.

'International Safety Management Code (ISM Code)'

Provides an international standard for the safe management and operation of ships and for pollution prevention.

'International Ship and Port Facility Security Code (ISPS)'

Details minimum security arrangements for ships, ports and government agencies.

'International Yacht Broker Association (IYBA)'

Originally established for yacht brokers buying and selling yachts in the state of Florida, USA but now a state wide association which has grown into one of the world’s largest organisations of yacht brokers.

'Knot'

Boat speed measured in nautical miles per hour. 1 nautical mile equals 1852 meters. Equivalent to one minute of latitude on a navigational chart.

'Long-Range Identification and Tracking System (LRIT)'

Provides for the global identification and tracking of ships. Under SOLAS Chapter V, regulation 19-1 vessels >300 GT on international voyages are required to transmit LRIT information.

'Maritime and Coastguard Agency (MCA)'

A UK based agency sponsored by the Department of Transport that works to prevent the loss of life on the coast and at sea. They produce legislation and guidance on maritime matters and provide certification to seafarers.

'Maritime Labour Convention (MLC)'

Sets minimum global standards for seafarers’ living and working conditions, combines and updates more than 68 maritime related international labour standards, and makes it easier for governments and ship owners to apply the system and provide decent working conditions. Not all ship registries have adopted the MLC.

'Maritime Mobile Service Identity (MMSI)'

This is a unique 9 digit number that is assigned to a DSC (Digital Selective Calling) radio or an AIS unit.  Similar to a mobile phone number an MMSI is a unique calling number for DSC radios or AIS units.

'MYBA Contract'

A contract used for luxury yachts that has become the standard in the Med and many other parts of the world.  Offers protection for charterers in case of cancellation.

'Ofcom'

The UK radio regulator.

'Owner-Operator'

A person who owns and skippers a charter yacht instead of hiring a captain to perform charters for guests.

'Paris and Tokyo MoU Lists'

The organisation consists of 27 participating maritime administrations and covers the waters of the European coastal states and the North Atlantic basin from North America to Europe. It inspects annually 18,000 ships in the participating ports to ensure they meet the international safety, security and environmental standards and that crew members have adequate living and working conditions. Performance lists of each flag state are updated annually. The white list is low risk, the grey list is medium risk and the black list is high risk.

'Passarelle'

The passageway you walk on from the dock to the yacht.

'Personal Locator Beacon (PLB)'

It is a personal electronic transmitter used to alert rescuers of a man overboard situation with a need to be rescued.

'Pre-Purchase Survey'

To be completed by an independent marine surveyor prior to the purchase of a boat. The survey report is used to check the seaworthiness and condition of the boat. It is also used to check the inventory against the list in the contract. Importantly, the report can also be used as a bargaining tool to lower the price or get some other concession.

'Private Yacht'

A yacht that is not available for charter, it is purely for pleasure use by the owner and guests.

'Protocol of Delivery and Acceptance'

Document signed by the buyer and seller of a vessel on delivery of the vessel confirming the date and time of sale.

'Provisional Registration'

A registration that gives the vessel full rights of passage without providing all the required documentation. It does not prove title.

'Qualship 21'

A US coastguard initiative to eliminate substandard ships and to identify high quality ships.

'Radio Licence'

UK radio licence online applications are free of charge via www.ofcom.org.uk or email: spectrum.licensing@ofcom.org.uk

'Red Ensign Group (REG)'

A collaboration of UK shipping registries that include British overseas territories and crown dependencies. It has two categories, category 1 for ships of any type, length or tonnage and category 2 for commercial ships and yachts of up to 150 GT and pleasure craft up to 400 GT.

'Representative Person'

A vessel owner may appoint an authorised party to act on their behalf. There may be a legal requirement by the chosen flag state for any owner not resident in the jurisdiction to appoint a local person to act as the owners representative. Where the ship registry lose contact with the owner they can then serve documents on the owner by sending them to the local representative person.

'Safety Of Life At Sea (SOLAS)'

An international convention that specifies minimum standards for the construction, equipment and operation of ships, compatible with their safety. Flag states are responsible for ensuring that ships under their flag comply with its requirements.

'Seafarer Employer Agreement (SEA)'

Sets out the terms of a seafarers employment.

'Ship Security Alert System (SSAS)'

'Ship Security Plan - SSP'

A plan that is formulated to ensure that the measures laid out in the plan with respect to the security of the ship are applied onboard.

'Standards of Training, Certification and Watchkeeping (STCW)'

International convention ets out minimum qualification standards for masters, officers and watch keeping personnel on seagoing merchant ships and large yachts.

'Superyacht'

A luxury yacht (moto or sail powered) which is professionally crewed and has a loadline length of 24 metres and above.

'Tandem Charter'

A charter that includes more than one yacht.

'Tender'

A boat used to service or support other boats generally by transporting people or supplies to and from shore or another ship.

'Tonnage Survey'

A fundamental part of the yacht registration process. British merchant shipping laws require all yachts registered under Part 1 of the British register of ships to have been surveyed by a recognised surveying authority or classification society prior to being registered.

'Tonnage Tax'

A taxation mechanism that can be applied to shipping companies determined by the net tonnage of the fleet of vessels under operation or use by a company.

'Transcript of closed registry'

Sent to the owner on completion of the closure of a ship registration.

'Under Construction Charter'

A document that ensures conditions for workers on construction projects meet the highest standards.

'Worldwide Yacht Brokers Association (MYBA)'

Originally the Mediterranean Yacht Brokers Association but now means The Worldwide Yacht Brokers Association. Based in the Med and one of the primary professional organisations for reputable charter brokers.

'Yacht'

A sailing or motor yacht designed for pleasure that typically ranges from 40 to 100 feet long.

White Triangle

At Fiduchi we realise that not everyone is going to understand some of the terminologies which are used in the financial service or legal industries. Fiduchi's ethos of being a 'Trusted' partner of choice means that we aim to explain what specific terms mean in our service areas.