The concept of a trust is even older that the concept of a limited liability company and started in the British middle ages as an alternative solution for succession planning and outsourcing of estate management. The general idea behind a trust is that one person, trust founder (Trustor/Settlor/Grantor) entrusts his property and assets to another person, the Trustee, so this person can manage and operate this property in accordance to specifically outlined instructions in the Trust Deed of will (Trust Instrument) for the benefit of a third person, the beneficiary.
The main benefit of a trust is that once it is created the legal ownership and management of any property under the trust is vested in the trustee, and it is the trustee’s duty and responsibility to administer that property strictly in agreement with the founder’s directions without the right or power for alteration of any terms laid out in the trust deed. However, it is important to note that although the legal title of the trust property is entrusted to the trustee, it does not belong to the him/her but to the beneficiaries of the trust and other than the founder, only they have the right to alter the terms of trust deed when they are of age and capacity. This opens doors for many opportunities for efficient wealth management and planning as trusts are not taxed in most countries and often can benefit from double tax treaties. A trust gives an investor living or moving to a high tax country the opportunity to divest oneself from personal high value assets by creating a secure holding instrument with possibility for future international investment that will ensure that the dividends and profits from this investment are not remitted to the country of residency but are protected and efficiently managed for the future inheritance by his selected beneficiaries. This brings us to one of the biggest advantages of a trust, which is the flexibility of appointing beneficiaries and their beneficial share without basing this on the local laws of inheritance and asset distribution. The beneficiaries of a trust do not have to be related by blood or have any specific traditional relationship with the founder, the sum and distribution timeframe of their share of the trust property can be assigned at the full discretion of the founder and if necessary, only for a specific purpose or upon compliance with certain conditions.
As mentioned above, a trust is a highly individual instrument and as such can be tailored specifically to the wishes and objectives of the founder. This is why there are several types of trusts that can be formed based on the specific purpose for which they are created, for example a Discretionary Trust, a Charitable Trust, a Constructive Trust, a Fixed Trust, a Revocable and Irrevocable Trust, a Special-Needs Trust among many others. Furthermore, although the general concepts of a trust are the same throughout, every jurisdiction offers its own benefits and regulatory framework for trust registration and some countries like Cyprus, for example, offer the option of a local or an International Trust. Our firm is highly experienced in trust formation and administration on a global level with a key specialization in Cyprus, UK and UAE trusts. Our lawyers can advise you on the right type of trust or alternative instrument for your particular objectives, can tailor draft a failproof trust deed covering every possible aspect of your wishes, take inventory and evaluate your assets for accurate inclusion in the deed and provide you with legal support as well as tax and legal opinions, that will inform you of any possible liabilities, catered to your particular circumstances. Furthermore, our legal team can provide trustee services of all forms, including nominee shareholder services for your legal entities that will ensure enhanced confidentiality and anonymity for your enterprise. We can also act as Protectors in your trust, which is an optional but highly recommended role that allows the appointment of a firm or individual to watch over the trust and make sure that it not affected by any future laws or unexpected circumstances as well as ensure that the trustee is performing his/her duties properly and does have any conflicts with the beneficiaries. Our lawyers are highly professional and handle their trustee and protector services with utmost care and confidentiality which is exactly why we pride ourselves on having built very trusting and long-lasting relationships with our clients. Our firm guarantees quality and professionality in everything we do.
For more information on trusts or an alternative succession planning solution, please feel free to read our article on Registration of Trusts and Foundations or contact us for a complimentary consultation.
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