The reasons for establishing trusts or settlements are varied and the advantages will depend upon the residence and domicile of the settlor and the beneficiaries and the legislation in their country of residence.
The most common form of trust used is a discretionary trust whereby the legal and beneficial ownership of assets is transferred from a person, called the settlor, to the trustees, who hold those assets according to the terms of a trust deed. Beneficiaries are named in the trust deed, and additional beneficiaries can be added at a later date but the extent of their participation in the trust is at the discretion of the trustees.
Accordingly, the beneficiaries have no legal rights to any particular portion of the trust fund. The settlor may indicate to the trustees their wishes as to the disposal of the trust fund and this expression of wishes gives them guidance on the distribution of the trust assets.
A protector may be appointed with certain powers of supervision over the trustees to provide added comfort. Trusts have evolved to meet the requirements of individuals who wish to set aside a part of their wealth during their lifetime so that:
- Assets may be independently protected, preserved and enhanced for the benefit of future generations
- Issues in respect of succession planning and inheritance laws may be effectively managed
- Effective long term tax planning strategies may be employed
- It is placed in an area of political stability, secure from the changes of government policy or regime
- Privacy and discretion may be assured
Trusts in Guernsey are governed by “The Trusts (Guernsey) Law, 2007”.
The trust deed does not have to be registered in Guernsey, is not available to the public for inspection and is treated as confidential.
In certain circumstances, it may be recommended that trusts be established outside of Guernsey and these will be subjected to similar considerations. Our company is fully versed and experienced in administering trusts established in many jurisdictions.