Trust Formation

Trusts are arranged so that assets can be transferred to a trustee for the benefit of a class of beneficiaries. The trustee has a legal obligation to administer the assets of the trust for the primary benefit of the beneficiaries and in accordance with the terms of the trust deed.

Offshore trusts can hold assets in various forms but the following are the most common:

1. Real estate
2. Bank deposits
3. Life insurance policies
4. Intellectual property
5. Shares and stocks for private and public companies

The main advantages of transferring assets into trust include:

Estate Planning

The settlor can express his wishes on how the trust’s assets are to be administered, in favour of the beneficiaries. This might involve providing a source of income but not capital, providing for the education of children and providing for capital distribution at a specific time, for example, once the children have reached a certain age.

Forced Heirship Avoidance

Certain countries have forced heirship provisions whereby the deceased is forced to vest property in accordance with local law. If the property is held through a trust, forced heirship is avoided.

Tax Planning

Once the assets are transferred into trust, legal title passes to the trustees. As a consequence income and capital gains generated by those assets are taxed as though owned by the trustee - so that, provided a trust is correctly structured, capital gains tax, inheritance tax and estate duty should be reduced or perhaps eliminated.

Confidentiality

The trust deed is a confidential agreement between the settlor and the trustee and is not available for public inspection.