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Offshore trusts

History of Trusts

Trusts are a feature of English law and originated around the thirteenth century. Land and buildings represented the normal store of wealth at that time, and it was commonly land which was conveyed to trustees for reasons of tax avoidance and administrative convenience.

The system of taxation in feudal times imposed a tax when property passed from one person to another on death. This was overcome by registering title to the land in the name of a trustee who, on the death of one beneficiary, would hold the property for the use of another.

The use of trusts has continued to flourish reflecting our continuing requirement for tax and succession planning and asset protection.

What is a Trust?

noun., confidence; response in person by making him nominal owner of property to be used for another's benefit; right of the latter to benefit by such property so held; legal relationship between holder and property so held.

There are three constituents to a trust, these include:

  1. The settlor, noun., in law, the person who makes a settlement of property
  2. The beneficiaries, noun., person(s) who may benefit from the asset held within a trust
  3. The trustee, noun., person to whom another's property or the management of another's property is entrusted

A trust is a legal relationship created by means of a trust settlement or agreement, which is evidenced by a written document and established under the laws of the relevant jurisdiction, or country.

The ‘settlor’ of the trust would transfer ownership of assets to the trustees. Trustees, such as Fortress, are appointed in terms of the trust settlement to administer the assets of the trust for and on behalf of ‘beneficiaries’. Fortress can provide a convenient way for the client to combine his investment with a professional trust service.

A trust protector may be appointed to represent the beneficiaries and to guide the trustees in the exercise of their discretion and in accordance with the trust settlement.

In most circumstances, an Isle of Man trust is not liable to any form of Isle of Man taxation provided all the beneficiaries are not resident on the Isle of Man.

Types of Trust include;

  • The flexible interest in possession trust
  • The discretionary trust
  • The purpose trust

Offshore trusts are extensively used by high net worth individuals to take advantage of tax and financial planning opportunities and are also used by individuals to protect and preserve family assets and wealth.

What assets may be transferred into a trust?

  • Stocks and shares in quoted and unquoted companies
  • Investment portfolios
  • Real and intellectual property
  • Bank deposits
  • Life assurance policies

Why a Trust?

Offshore trusts offer many advantages, and some of their more common uses are:

  • Tax mitigation
  • Protection of assets
  • Preservation of family wealth
  • To circumvent forced heirship

Practical applications of a trust include:

  • Protection from hostile legislation
  • Estate planning
  • Asset administration
  • Succession planning
  • Tax saving
  • Asset protection
    • divorce
    • bankruptcy
    • unforeseeable creditors and long term care
  • Privacy

To discuss your trust requirements please contact us.