A "trust" or "settlement" is a common law English structure the origins of which date back to the 12th Century. Wealthy nobles travelling on long journeys would hand over legal title and control of their assets to a trusted individual, family or friend ("a trustee") and this trustee would then manage the lands, estates and perhaps chattels on their behalf during their absences.
The concept was also adopted by Franciscan monks early in the 13th Century who, because of their inability to own property in their own names, transferred the title and management of any personal assets to a third party.
Over time the use of trusts has evolved and found a wide variety of use. Nowadays there are very strict rules governing the relationship between a settlor ("the donor of the assets"), a trustee and the ultimate beneficiaries which are laid out in law and the trust instrument. For example in Jersey both individuals and corporate trustees are regulated by the Jersey Financial Services Commission which has a high reputation as a rigorous and transparent centre in the financial services world.
There are a number of benefits to be gained from establishing an international trust; these include protecting your assets, confidentiality, succession planning, avoiding probate, mitigating taxes, addressing forced heirship issues and, perhaps equally important, freeing yourself from the potentially demanding time that goes with managing your estate on a daily basis.
Examples of the types of trusts on offer:
In circumstances where you are unable to predict the needs of individually named beneficiaries or class of beneficiary (such as unborn grandchildren), then a discretionary trust may well be suitable to you.
The terms of a discretionary trust usually give the trustee a large degree of discretion to exercise their own judgement over the management and in particular the investment of the trust fund as well as the timing and amount by which your beneficiaries might benefit.
This type of trust allows you to specify exactly who should benefit from the trust and the manner in which they should benefit. The trustee, therefore, has very few, if any, discretionary powers reserved to it under the term of the trust instrument.
An example of where a fixed interest trust might be suitable is if you wish to distribute the income generated from the trust assets to a specific person during his or her lifetime (for example, your spouse) but you would eventually like the beneficiaries of those assets to be other persons (such as your children).
In the situation where you may wish to retain a degree of control over how the assets are managed, invested or decisions affecting the ultimate distribution of the assets, the addition or removal of beneficiaries.
If tax is not an overriding or primary objective this type of trust may be suitable.
Typically this type of trust is used to benefit a specific group of beneficiaries, such as grandchildren, until they attain a certain age.
The terms of the deed will set out the arrangement, however, it is often partially fixed and partially discretionary giving the trustee relative freedom to make decisions, always in the best interests of the beneficiaries, prior to them attaining that age.
It is possible to incorporate relevant aspects of Sharia law in succession planning. A Sharia compliant trust can allow you to adhere to Islamic faith while preserving and transferring assets to your heirs.
A PTC is a company incorporated to act as a trustee for a closely defined or specific connected group such as a family. It can be owned by a "Purpose Trust" or "Foundation" that we administer. It should be considered by families wishing to create one or more trusts for various purposes, to own real estate, art work, family businesses or commercial interests, private equity, quoted investments, consolidating the administration of various family trusts or philanthropic objectives.
Settlors of such trusts often wish to maintain a degree of control over the assets and in particular the family’s company shares. It is possible for a PTC to offer greater control, as you, family members or close advisors may (subject to fiscal constraints) serve on the board of directors.
The above is written as a general guide. Any course of action will depend on individual circumstances. You are strongly recommended to obtain your own specific tax/legal advice before you proceed. We do not accept any responsibility for actions taken as a result of reading this information sheet.
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