Trusts are used by wealthy families and individuals for the preservation of wealth and for tax and estate planning purposes. Following are some of the advantages of placing assets into a trust:-
1Eliminate or reduce tax - Subject to anti-avoidance provisions in the Settlor’s home jurisdiction and other personal circumstances, significant immediate or future tax savings can be achieved as a result of placing assets in offshore trusts.
2Asset Protection - Subject to certain requirements, Trusts may be registered as Asset Protection Trusts to enable assets to be protected from creditors or in the event of a bankruptcy. See below for Asset Protection Trusts.
3Provide Continuity to a Family Business- A trading company placed within a trust will already have suitable trustees who are able to oversee its activities and ensure that the company continues to trade successfully and provide ongoing income and opportunity to future beneficiaries. lt will also allow the trustees to guide future generations who will manage and run the business, thereby providing continuity into the next generation.
4Avoid Probate - Assets that are placed in a trust will avoid going through the lengthy process of probate as they will already have been legally transferred to the trustees during the Settlor’s lifetime and will pass to the beneficiaries as per the terms of the trust.
5Avoid Dissipation of Assets - Assets placed in a trust will prevent a young beneficiary from dissipating them until such time as the trustees feel he or she is responsible enough to handle large sums or significant property.
A trust is created when an individual (called the "Settlor") transfers assets to trustees (who can be either individuals or a Corporate entity licensed to act as such) to be managed by them for the benefit of selected Beneficiaries. The relationship is governed by a legal document called a Trust Deed. This will be a document the terms of which will be negotiated between the Settlor and the Trustees. Should the Settlor not wish to be named in the deed, the Trustees may simply prepare a Declaration of Trust. The identity of the Settlor will therefore remain with the trustees and may only be released in certain limited circumstances. See attached Basic Outline of a Typical Trust Structure.
The trust deed governs the terms upon which the trustees are to administer the trust. The trustees act in a fiduciary capacity and are required by law to act in good faith and in the best interests of the beneficiaries. lf there is a breach of trust, the beneficiaries may have the right to take legal action against the trustees.
The Settlor will often provide a Letter of Wishes which will set out how he would like the trustees to manage the trust assets and when and to whom the assets should be distributed. The trustees are not legally bound to follow those wishes, but can rely on them for guidance. lt is possible for a Settlor to provide further letters of wishes as and when he chooses throughout the life of the trust.
The Settlor may also appoint another individual in the role of what has come to be known as a "Protector". The Protector is an individual who will have personal knowledge about the Settlor, his family and their financial affairs, and will often be a trusted individual who has known the family for many years, and be able to provide useful input to the trustees during the course of the trust’s existence.
The Protector's most common role is to supervise the trustees, and the trust deed may require the trustees to obtain his prior consent to carrying out certain actions. For example, the trust deed may require the trustees to seek the consent of the Protector before making any payments to the beneficiaries. The trust deed may also require the Protector's consent prior to the addition or removal of beneficiaries.
Discretionary - Any distributions to a beneficiary are entirely at the discretion of the trustees.
Life Interest - A beneficiary will be entitled as of right to the income of a trust, or use of a trust property, during his or her lifetime. On the death of that beneficiary, the trust can become a discretionary trust with additional beneficiaries.
Asset Protection Trusts - a type of trust which when registered can provide protection against creditors.
1. An efficient legal system based on the English system of law.
2. A modern politically and economically stable environment.
3. A multi-skilled workforce holding recognized English or European Qualifications
4. English is the official language of Gibraltar and is the favoured language of international commerce.
5. Sophisticated and reliable telecommunications.
6. Gibraltar has its own airport and is two and a half hours by air from London, as well as being only an hour and half from Malaga International Airport allowing access to all major cities of the world.
7. No VAT, Capital Gains Tax, inheritance Tax, Estate Duty, Wealth or Gift tax.
8. Strong financial services infrastructure regulated to high European standards.
9. Facility to register as a High Net-Worth Individual (Category 2) thereby reducing personal tax payable.
Should you wish to set up an offshore trust in Gibraltar please email us. If you would prefer a face to face meeting to discuss your requirements, you may contact us on +350 20074998.
Success and its resultant wealth have always attracted law suits and family squabbles as well as excessive attention from tax authorities. The Asset Protection Trust (“APT”) goes some way to protecting that hard-earned fortune and ensuring the assets are managed effectively and protected from opportunists and genuine creditors alike, as well as from punitive taxes.
In Gibraltar, the APT has the added advantage of being created under Bankruptcy legislation as opposed to the traditional “fraudulent conveyance” legislation found in other jurisdictions. Legally and practically speaking, it makes it a lot harder for a creditor to attack the assets placed into an APT.
Stringent requirements have to be fulfilled to benefit from this vehicle and include the following:-
For further information and details of how you can take advantage of this asset protection vehicle, please contact us via email or on +350 20074998.