A trust is a fiduciary relationship in which one party, known as a settlor, gives another party, the trustee, the right to hold title to property or assets for the benefit of the beneficiary. Legally, these assets are held by the trustee, but are in fact owned by the beneficiaries.
The concept of a trust in its pure form belongs to the common law jurisdictions. All common law countries mutually recognize this system. Trusts are also recognized by many countries thanks to the Hague Convention on the Law Applicable to Trusts and on their Recognition.
There are many reasons to use a trust. The major purposes are the protection of assets, inheritance and tax benefits.
Protection of assets
A trust can be an effective instrument for protecting assets. By placing property into a trust regime, the settlor separates the property's legal ownership and control from its equitable ownership and benefit. This means that the property is separated from the assets of the settlor and cannot be claimed in the case of bankruptcy, division of the property by the spouses, court decisions on the order of payment, or any other reasons.
Opting for a jurisdiction that provides trust asset protection at the moment of the establishment of the trust structure will provide additional protection of the assets, as compared to standard trust agreements, thus guaranteeing their maximum security.
The assets transferred to the established trust structures are not legally considered as the property of the founder; therefore, all the profits and capital gains on the assets are taxed in accordance with the laws applicable to the new owners, i.e. the trustees. However, correctly structured and properly managed trusts can dramatically reduce the amount of payable income tax, capital gains and inheritance taxes. In most developed countries, there is special legislation that nullifies the tax benefits accruing to offshore companies; trusts can serve as a legal way to avoid the anti-offshore legislation.
Inheritance and wealth planning
The common cause of a Trust Deed is the desire to maintain and/or increase the family's assets. An individual may wish the assets accumulated throughout his life to be kept in their entirety for further increments. Thus, it is possible to foresee the implementation of allowances to the family members, as might be necessary or for the education of the children, while the main assets remain and grow for the benefit of future generations.
A trust is probably the most convenient and flexible way to dispose of generated assets and it allows you to provide an asset management system that can quickly be adjusted depending on the circumstances.
FERZ SA pays attention to the needs of our clientele and offers a unique range of services for the creation and management of trusts in various jurisdictions. Our team of professionals with years of international experience in the creation and management of trust structures develop truly customized solutions that achieve the goals of our valuable clients.