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CORPORATE SERVICES |
The use of trusts for estate planning and asset protection dates back to medieval times and are creatures of English equity, which allows for property to be held by one person, not for his own benefit, but for the benefit of the eventual holder. Over the years trusts have become an effective means for minimizing taxes and protecting assets.
A trust is a relationship whereby property is held by one party called the "Trustee", for the benefit of another person or class of persons called the "beneficiary". The person who sets up the trust is usually called the "Settlor" and generally has no further part in the running of the trust.
The trust document is a written instrument which details the duties of the Trustee, names the beneficiaries and list the property in the body of assets.
A trust is usually created by deed or by will. The deed or will is known as the trust instrument and this, together with the general law of trusts, will govern the administration of the trust assets.
The three certainties of a trust:
 | Certainty of words - intention to create a trust relationship must be certain |
| Certainty of subject matter - trust property must be certain |
| Certainty of objects - persons or objects intended to benefit must be certain. |
A trust, unless it is charitable, cannot go on forever. The so-called "rule against perpetuities" prevents a person from tying up property for generations on end. Modern trusts have a maximum life span of eighty or one hundred years. Trustees are permitted to accumulate income during the trust period.
A trust is an adaptable instrument. By including different clauses in the trust document a variety of trust "types" can be set-up, such as:
 | Interest in possession trusts |
| Discretionary trusts |
| Asset protection trusts |
| Purpose trusts |
For the international client a trust instrument can be prepared to meet the particular requirements and circumstances of the settlor and intended beneficiaries. In recognition of possible changes in circumstances the instrument will usually contain provision for:
 | Acceptance of additional property into trust | |
| | The appointment of trustees outside the jurisdiction of choice | |
| Changing the governing law | |
| Appointment of additional beneficiaries and exclusion of any beneficiary | |
| Distribution of the trust fund to another trust. |
A settlor can set out in the trust instrument the way in which he wishes the trustee to administer and invest trust property and provide the beneficiaries with fixed entitlements respecting distributions of trust property (a fixed trust). The modern tendency, however, is to provide the trustee, (a) by way of the trust instrument, with wide discretion with respect to both investment and distributions and (b) by way of non-legally-binding letter, with guidance as to how the settlor wishes the trustee to exercise these discretions (a discretionary trust).
When selecting a jurisdiction in which to establish a trust, it is important that professional advice be obtained to determine, as far as possible, that the trust will be recognized as such in the tax jurisdiction to which a client is subject. Depending upon the laws existing in their jurisdiction and their circumstances, clients will find that a trust offers:
 | Preservation of family wealth by avoidance of death duties |
| | Continuity of ownership and management of business assets |
| | Asset protection against future unknown claims |
| | Planning for emigration / immigration in the event of restrictions or changes in law |
| Tax-reduction or avoidance in relation to income or assets |
| Avoiding or reducing probate formalities where assets such as bank accounts are held in several countries |
| | Protection for infant children, aged parents or persons of unsound mind |
| Protect family property from wastrels |
| Confidentiality |
| | Provide pensions for retired employees and their dependents. |
Fees for acting as trustee are structured to individual requirements and circumstances and will take account of the duties and responsibilities involved. Generally, our fees will include an initial fee for setting up a trust and an annual fee reviewable from time to time.
Annual fees are payable in advance for the year commencing January 1 and for trusts established in another month, the first annual fee will be pro-rated. Fees for unusual or exacting administrative duties are billed on the basis of time spent.
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