A growing number of offshore jurisdictions have responded to settlors’ desires to retain control over settled assets by introducing legislation that enables them to categorically reserve certain powers and rights over a trust.Some settlors, for example, express a desire to retain investment powers and other administrative functions of the trust. In fact, many settlors insist on being able to continue to exercise the same level of control over their assets as they had prior to establishing a trust over them.Such innovative legislation provides comfort to those previously reluctant to entertain the proposition of a trust for fear that they would lose control over the trust assets. This is clearly an attractive feature and has paved the way for a level of settlor participation that would previously have raised fundamental concerns over the validity of the trust.In Bermuda, section 2(3) of the Bermuda Trusts (Special Provisions) Act 1989 provides for the reservation of powers by a settlor.Whereas the legislation of certain other offshore jurisdictions specifically lists the various powers that may be retained, Bermuda has chosen not to follow suit in enacting similar so-called “settlor reserved power legislation”.So the question arises, in the absence of expressly defined statutory rules on the matter, to what extent can a settlor safely reserve powers and rights to himself (or another party) under Bermuda law without compromising the integrity of the trust?In Bermuda, until recently, there had been limited judicial guidance about where the boundary lies between the extent of powers that may be validly reserved - and a trust failing on the face of the trust deed itself due to the extent of the powers retained. However, some guidance was provided in a recent ruling of the Supreme Court of Bermuda. The Court indicated that Bermuda did not necessarily need statutorily laid out rules for a valid reserved power trust to be created under Bermuda law. It indicated that a settlor was free to retain extremely wide powers over the trust without fear of jeopardising the trust. This was the case notwithstanding the absence of specific legislation enabling one to reserve certain rights and powers. In view of these comments, Bermuda law may well be considered as providing greater flexibility to settlors than the law of those jurisdictions where one must comply with certain expressly laid out rules. However, in the end, the crucial question will be not so much what rights and powers have been retained by a settlor, but whether the settlor genuinely intended to create a trust that seeks to vest persons other than himself with rights that are enforceable against the trustee.If this question is answered in the affirmative, then the likelihood is that you have a valid lifetime trust.Attorney Naresh Chand is a Senior Associate in the Private Client and Trusts Department at Appleby. A copy of this column is available on the firm’s website at www.applebyglobal.com.This column should not be used as a substitute for professional legal advice. Before proceeding with any matters discussed here, persons are advised to consult with a lawyer.