Zetland   Zetland  Basic Features Of Trusts

We are an independent trustee and do not operate under any bank or organisation. Our team is comprised of highly qualified individuals that includes lawyers and accountants, who take pride in providing excellent service to clients

Basic Features Of Trusts

A trust is a relationship whereby a legal person (the trustee) holds property donated by a settlor (grantor in USA) for the benefit of third parties (the beneficiaries). Trust relationships arise frequently in day to day affairs and are common in almost all cultures and countries. The law relating to trusts has its origins in medieval England and has evolved over a period of several centuries to become one of the most effective tax and estate planning techniques available. Today, most jurisdictions based on the English common law system, such as the USA or Hong Kong, have extensive law relating to trusts. Jurisdictions based on a civil code system, such as France or Switzerland, generally recognise the legal basis of trusts.

The essence of a trust is the transfer of legal ownership of property to a third party and the clear communication of instructions for the use of proceeds from and disposal of the property. If instructions are not strictly followed, the trust may be held to be a sham and thus invalid from inception. However, there is a great deal of flexibility in the way that trusts can be structured and there are numerous safeguards available to protect the interests of all parties.

Three basic forms of trust:

Bare Trust

This is a simple form of trust usually involving a single item (eg ownership of shareholdings in corporate entities).

Will Trust

This form of trust is created upon death pursuant to the terms and conditions of the deceased's will. The executors of the estate are usually appointed trustee.

Inter Vivos Trust

This form of trust is created by a living person and may be either on a discretionary basis where there are wide powers available to the trustees to allocate benefits and make investments - a Discretionary Trust or a Fixed Interest Trust - where entitlements of beneficiaries are defined in detail.

The three main parties involved in a trust

Settlor

The person or company who transfers legal ownership of the property to the trustee and in so doing “settles the trust”. In the USA, this person is often called the grantor or the trustor.

Trustee

The person (usually a trust company) charged with the primary responsibility of administering the trust.

Beneficiaries

The people or institutions who benefit from the property held on trust.

Additionally, many trusts have a Guardian and/or a Protector appointed to monitor the activities of the trustees and to ensure that the settlor's intentions are being followed. The protector usually has the power to change trustees.

The most important document in settling a trust is the Deed of Trust. This is the blueprint for the trust and must be carefully drafted. The language must be unambiguous since it will be referred to for many years. A Memorandum of Wishes is also often drafted by the settlor to indicate in a discretionary trust how the trustees should service the beneficiaries. Finally, there needs to be a transfer of legal ownership of the property to establish the trust. This should be fully documented to show that a change of ownership has in fact taken place.

All types of property may be held under trust including cash and bank balances, securities, personal and real property and shares in private companies. If personal property such as works of art, jewellery or furniture are being settled into a trust, it would be important to inventory and tag and identify these items. Ownership of the property rests with the trustees at all times, but use and day to day control may be delegated to others.

The trust itself has no legal identity (except in the USA). Rather it establishes a relationship between the trustee and the beneficiaries. The trustee has a strong fiduciary duty towards the beneficiaries.

An important class of trust is the charitable trust where the beneficiaries are generally unrelated to the settlor and the reason for setting up the trust is altruistic in nature. In many countries charitable trusts are treated favourably for tax purposes and are therefore not often set up offshore.

An Offshore Trust may be defined simply as a trust established in a jurisdiction different from the domicile of the settlor. However, it is generally taken to be a trust established in one of the offshore trusts jurisdictions like Belize, BVI, Cayman Islands, Cook Islands, and Jersey to name a few. Offshore based trusts are proven vehicles for establishing the legitimate ownership of both offshore and onshore assets. They are particularly useful in regulating the succession to family wealth. In most developed countries the taxation of trusts has become extremely complex due to their ability to be used for favourable tax planning. In general and depending upon the domicile of the settlor and beneficiaries, offshore trusts enable income and gains to be accumulated with minimal local taxation.

Over the centuries, English trust law has evolved some basic rules regarding the conduct of trusts including:

A trust must have a limited (though possibly very long) life.

The settlor cannot be a beneficiary of the trust.

Settlement of property into the trust is irrevocable.

Trusts cannot be used to defraud creditors. In recent years, many of the offshore jurisdictions have enacted legislation to ameliorate the first three of these provisions and to place time limits on a creditor’s ability to prove fraud in transferring legal ownership of property to a trust.

Trustees are subject to strict legal constraints on the way they handle their responsibilities. They must show a duty of care, utmost good faith and exercise professional diligence in administering the trust for the benefit of the beneficiaries. They are also responsible for managing the investments and cash held by the trust and tend to be conservative in approach to ensure preservation of the capital base of the trust.

Trustees are generally free to engage other professionals such as investment managers to assist them. Trustees are also able to take their remuneration from the trust property held by them. In general, such remuneration is based on the value of assets held, subject to a minimum annual fee, and is often detailed in the trust deed.

信托的基本特征

信托是一種關係,法人(受托人)為第三方(受益人)利益持有的,由委托人(在美國為授予人)捐贈的財產。信托關系在日常事務中頻...

香港信託

香港擁有與其他主要信托司法管轄區(如英國、新加坡及歐洲及加勒比海的離岸金融中心)同等水平的現代及具競爭力的信托法。...

离岸信托的好处

离岸信托的使用可以产生许多实质性的好处。通常,在实施之前,需要在公民身份,居住地和住所所在国中采取适当的专业建议。...

控制和保護問題

信托的本質在於將財產的合法所有權從委托人轉移給受托人。 委托人如何確保財產得到妥善保護並且他的意願也能得到遵守? 有...

投資問題

信托資產的自由投資可能是受托人面臨的最大困難之一。如前所述,受托人有責任為受益人保留信托資產,因此,受托人往往傾...

專業顧問

在建立信托之前,應始終征求委托人在居住國/國籍方面有經驗的專業人員的意見。專業顧問應至少仔細考慮以下問題,並與客...

Zetland的信托管理方法

Zetland的信托管理方法可以用兩個詞來概括: 忠誠和客觀。 忠誠是因為我們積極地將信托資產視同我們自己的資金而奉獻...

成本和費用

Zetland根據以下基礎收取信托費,一般不按管理資產的百分比收取費用或征收分配費。 首次設立費用----這包括接受指示...

信托术语表

资产保护信托 一种离岸信托,其主要目的是保护委托人的财产免受未来债权人的攻击 纯粹信任 ——信任的一种简单形式 ...