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The trustee (Offshore trustees (In many offshore jurisdictions, the work…
The trustee
Offshore trustees
In many offshore jurisdictions, the work is often introduced from a uk tax adviser although it generally involves more succession planning than previously and wider families
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Onshore financial products sometimes do not meet the privacy needs of the settlor and beneficiaries or because the underlying business structures do not meet the succession requirements of the settlor
Both small and large offshore trustees are targeting Latin American and Asian cultures more succession structures than for tax
Succession planning has become the main driver with tax being secondary, in the emerging markets such as the Middle East, Russia, Turkey, Asia and even Continental Europe
Confidentiality is the key driver and tax mitigation only an added bonus in the more acceptable international finance jurisdictions
IFJs are increasingly used to consolidate a business with personal assets, under a structure that achieves confidentiality combined with first class corporate governance
Appointment of a trustee
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May be appointed on the creation of a trust and doing its continued administration whether as a replacement trustee for an existing trustee or in addition to the existing trustee
The appointment is usually made by deed without the involvement of the court. It is only in exceptional circumstances that the court will appoint a trustee
The settlor or the testator usually appoints the original trustee at the time the trust is set up. The original trustee is usually named in the trustee deed or by a testator in a will
Once constituted, the terms of the trust deed usually determine who has the power to appoint new or additional trustees. This power is usually granted to the continuing or retiring trustee, the protector or the settlor by the trust deed
If the trust deed does not make provisions for the appointment of a trustee, the trust law of the jurisdiction usually provides for a trustee to be appointed by the
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The trust deed may exclude certain persons from being appointed. The settlor cannot appoint a new trustee once the trust has been properly constituted unless there is an express power in the trust deed for him to do so
Number of trustees
Differs from jurisdiction to jurisdiction but often one trustee will suffice unless the terms of the trust deed provide otherwise
As a general rule there is no minimum number of trustees required by law and a sole trustee can act in the trust
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One the trust has been perfect constituted, the trust will not subsequently be allowed to fail, for example the death of a sole trustee will not prevent the continuation of the trust due to the equitable general maxim of ' the court will not allow a trust to fail for want of a trustee'
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The role of the trustee
Holds the legal title to the trust assets whilst the beneficiaries hold the equitable title to these assets
May be required to balance between the rights of the beneficiaries who are entitled to receive income and/or capital against those where they have a defined interest in the assets, ie in a life interest trust
The first trustee is a person or corporate body normally appointed by the settlor in a trust deed or similar document or by the testator in a will
The assets of the trust are transferred from the settlor into the name of the trustee (not into the name of the trust)
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The relationship between the trustee and the beneficiaries is a fiduciary relationship, i.e one that is founded on trust. The trustee has a duty to act in the best interests of all the beneficiaries
Trustees have specific duties laid down in trust law and powers obtained from the trust instrument or trust law
The trustee would normally be an individual or body corporate, which would usually require a licence from the local regulator to act as a trustee. They must be able to hold assets in their name or if an individual, they must be sane and cannot be a minor as minors cannot hold assets in their name