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Modern uses of trust (Family and estate planning (Retain property within…
Modern uses of trust
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Advantages
Offshore jurisdictions have an established and high reputable and experienced range of trustee service providers who can create bespoke trust structures
Reputable offshore jurisdictions have implemented robust trust and regulatory laws and processes which are updated on a regular basis to uphold their own high standards
Offshore jurisdictions have also enhanced their standing by the completion of cooperation agreements with other offshore jurisdictions
Supporting the TSPs is an established infrastructure including banking expertise, accounting and legal services. This enables them to also offer a variety of financial services, a high level of expertise which means that all of the settlor's financial needs can be addressed from within a single offshore jurisdictions
It is likely that the offshore jurisdiction will have a favourable tax regime for non residents and do not usually have exchange control regulations in place that restrict the movements of funds in and out of the jursidciton
Disadvantages
Cost, including legal fees and TSP fees. The trustee will normally charge a fee in relation to the constitution of a trust to cover their time costs in undertaking their due diligence requires before the trust can be established. The trustee will also charge fees in respect of maintaining and administering the trust and the provision of trustee services
The concept of the separation of equitable and legal ownership of assets is not recognised in all jurisdictions
The settlor no longer owns the assets of the trust as they have been transferred from their name into the name of the trustee. They therefore are not able to do what they want with the assets however the settlor may request the trustee to undertake certain actions by a verbal or written request or in a letter of wishes but the settlor cannot insist that the trustee undertake these actions
The trustee may not undertake the same risks in the investment of the trust assets as the settlor would like as the trustees risk attitude may be different to the settlors
The sectors circumstances may change during the life of the trust and the trust deed and supporting trust documentation may make it difficult or even impossible to continue to administer the trust, eg the settlor wishing to benefit from the trust assets even though they had irrevocably excluded as being a beneficiary.
Efficient tax planning
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The assets are transferred to another (the trustee) so that they will not usually form part of the taxable assets of the settlor by
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The settlor is seeking protection of a stable political and social environment for the ownership and management of assets
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