Trusts can provide a flexible solution for an extensive range of wealth planning, family or business needs.
They may be established as stand-alone solutions or as part of a larger structure. ILS World has a great deal of experience in establishing trusts in key jurisdictions and our comprehensive service includes drafting the Trust Deed, providing a corporate or individual trustee, establishing related corporate structures, maintaining trust accounts, arranging banking facilities and administration. Where necessary we liaise with specialist lawyers to ensure our drafting is bespoke and precise.
What is a Trust?
There are many forms of trusts. The defining factor of most is a person or persons, (the settlor) settles assets into trust, to be managed and controlled by the trustee for the benefit of beneficiaries.
When a settlor places assets into trust they generally cease to have control over them. The benefit of the assets is held for and on behalf of the beneficiaries by the trustee. The terms of the trust dictate when income or capital or other property may be passed to or enjoyed by a beneficiary. Trustees may have partial or full discretion over the trust assets, subject to the Trust Deed.
The settlor may provide some guidance on how the trust is administered through the terms of the Trust Deed and a Letter of Wishes. The settlor must not control the assets, unless through specific powers conveyed to him under the terms of the trust. He can, however, be named as a beneficiary of the trust.
Under trust law the trustees are bound by a duty to the beneficiaries to ensure the proper administration of the trust and have a strict legal obligation to always act in their best interests.
The legal ownership of the assets is vested in the trustee and the equitable right or beneficial ownership is held for the beneficiary.
It is important to note a trust is a relationship established between the trustees and the beneficiaries, not a separate legal entity as is a company.
What are the different types of Trusts?
There are several types of trust structures:
A Discretionary Trust is a trust under which the trustees have discretion concerning distribution of the trust assets. The Trust Deed will generally specify a class of beneficiaries and in a typical case the trustees will periodically decide whether to distribute trust income to one or more of the class of beneficiaries or to retain it and add it to the capital of the trust fund.
The trustees' discretion may also extend to the distribution of capital. In most cases, the settlor will provide a "Letter of Wishes" to the trustees indicating how they would like the trustees to consider distributing the trust assets and to which beneficiaries during their lifetime and following their death.
Interest in Possession Trust
An Interest in Possession Trust or Fixed Interest Trust is one under which a particular beneficiary is entitled to the net income of the trust for a specified period, according to the terms of the Trust Deed. In most cases, the entitlement or interest will continue for the rest of the life of the beneficiary (a life interest) and on their death the trustees will have discretion to distribute the trust income amongst a class of discretionary beneficiaries or retain it and add it to the capital.
A Purpose Trust is a trust which does not have any beneficiaries, exists for a specific purpose, and is commonly used in conjunction with asset financing transactions, securitisations or to hold the shares of a Private Trust Company.
A Purpose Trust is formed as a result of a Deed of Trust between a settlor and the trustees. To be enforceable the Trust Instrument must clearly define the purposes of the trust so a court may determine these purposes. The purposes must be certain, reasonable, and possible and not unlawful, contrary to public policy or immoral.
What can you use a Trust for?
The uses of a trust include:
• Estate planning
• Asset protection
• Preserving family assets
• Business continuation
• Precluding forced heirship
• Tax planning
Why Choose ILS World
As a leading provider of independent fiduciary services to professional advisors, corporate groups, private and digital clients, we are here to help achieve your financial goals.
At ILS World, we don’t restrict ourselves, we like to go beyond the borders. That is why we operate globally. You will find our offices in Isle of Man, British Virgin Islands, Hong Kong, and Portugal.