Trusts

Definitions and How to Use

Trusts were originally developed in medieval England as an early form of estate planning and have long been associated with the protection of assets. A Trust enables an individual (“the Settlor”) to transfer legal ownership of assets to a third party (“the Trustee”) who holds and administers those assets for other individuals (“the beneficiaries”).

The Trustee has the legal title to the assets, but has no beneficial interest and must only use the assets for the benefit of the beneficiaries.

Nowadays a Trust is an established means of safeguarding an individual’s wealth and facilitating its enhancement and safe passage to future generations.

Potential benefits of using a Trust:

Safe harbour investments

• Asset Protection – assets placed in Trust remain entirely separate from a person’s estate and therefore can be used as a means of protecting assets from creditors, forced heirship provisions and the imposition of exchange controls or other government regulations.

• Estate / Succession Planning – Trusts can provide an efficient means of planning for the management of assets upon death, ensuring that long term provisions can be made to fund education of children and to provide an income for family members. As assets in a Trust do not form part of the estate of a Settlor when he or she dies, trustees are able to use them for the benefit of the Trust beneficiaries without going through complex legal procedures.

• Efficient Tax Planning – Once assets are transferred to a Trust they are no longer considered to belong to the Settlor and therefore Trusts prove to be one of the most useful tools for mitigating inheritance, capital gains and income tax as well as other associated wealth taxes both during an individual’s lifetime and on death.

• Political Protection – Persons living in countries where economic or political stability could pose a risk to the security and value of family assets can take advantage of the lodgement of such assets in a jurisdiction with a proven legislative and regulatory infrastructure, such as Guernsey. Foreign governments cannot seize assets held in trust in a country which is outside their jurisdiction, unless there is proof of criminal activity.

• Family Wealth Preservation – Trusts provide an ideal method of centralising control and administration of assets and ensuring that family wealth is preserved and enhanced.

• Anonymity – Trust Deeds in Guernsey are confidential documents and are not publicly registered.

What assets can be held in a Trust?

• Stocks and shares
• Term deposits/Bank accounts
• Insurance or Assurance policies
• Real and intellectual property
• Unit trusts/Mutual funds
• Private company shares

Richmond Fiduciary Group can establish Trusts in various forms, tailored to suit the needs of the individual client.