Here's a headline you don't see every day: a wealthy family going to court to pay more tax. That's essentially what happened in the recent Guernsey Royal Court decision in In the Matter of the X Trusts [2026] GRC 034.

The Story in Brief

The trusts in question held around £192 million and were set up under Guernsey law. But the UK-resident adult beneficiaries wanted their family wealth to contribute tax where they actually lived and raised their children. Their reasons weren't financial at all, they cited the optics of offshore wealth, a sense of moral responsibility, reputational concerns, aligning wealth with their values, and wanting more transparency around their charitable giving. The protector proposed swapping the Channel Islands trustees for a UK-resident professional trustee, bringing the trusts squarely into the UK tax net.

There was a huge financial cost to the family at stake. Actuarial evidence confirmed that UK taxation would significantly shrink the trust fund over time compared with staying offshore. The family decided the moral and social upside was worth it, and the Court agreed to the plan, confirming that "benefit" for trust purposes is not just about pounds and pence — moral, ethical and social factors can count too.

Alternative solutions

For many in the world of wealth planning, the case captures something we are seeing more and more: families asking not just "how do we save tax?" but "how does our wealth reflect who we are?" 

There are a number of ways of approaching this question besides bringing wealth within the tax net:

Family Charitable Foundations

We work with many families to establish bespoke charitable structures focused on their specific priorities.  These could be established as UK registered charities, which would qualify for UK tax relief if needed.  If UK tax is not an issue, many offshore jurisdictions, including the Channel Islands, now offer Foundation structures which can achieve these objectives in a similar way.  Foundations can hold assets, establish clear purposes and governance arrangements, and facilitate distributions to charities and charitable projects over many years.

Existing Trust Structures

In some cases, an existing trust can be adapted to place greater emphasis on charitable giving through governance arrangements, letters of wishes or regular philanthropic distributions, without fundamentally changing the underlying structure.

Family Philanthropy Planning

Families may also benefit from establishing a broader philanthropic framework, whether through charitable foundations, donor-advised funds or structured charitable programmes that allow multiple generations to participate in giving decisions.

Practical considerations

Before any family embarks upon a significant structural change, careful advice is essential.

Questions to consider include:

• What are the long-term UK tax consequences?
• How will future generations view the proposal?
• What governance arrangements should be implemented?
• Are there philanthropic objectives that should be formalised?
• Could a foundation provide greater clarity than an existing trust structure?
• What is the reputational impact of maintaining, or changing, the current arrangements?

The Guernsey decision is a timely reminder that successful wealth planning is not always just about preserving capital but about helping families achieve their wider objectives and create a legacy that reflects their values.  There are many issues to consider here, but many solutions available as well.

For more information, please contact a member of our Private Client team.