Introduction to the Trust Concept
A trust is a legally binding arrangement whereby a person (known as the Settlor) transfers assets to another person (known as a Trustee) who is entrusted with legal title to the trust assets, not for his own benefit but for the benefit of other persons (known as beneficiaries, who may include the Settlor or a specified purpose).
Uses of Private Trusts
The range of uses to which a trust may be employed is constantly being developed. Flexibility and confidentiality are the principal advantages which a trust has over other legal forms. Trusts can be designed to hold, preserve, transmit and enhance wealth.
The trust concept has proved to be enormously adaptable and is widely used in financial planning. Some typical applications for individuals wishing to set up a trust are as set out below:
Preservation of Wealth
Trusts may be used to preserve the continuity of ownership of particular assets, such as a business, within a family. The use of a trust avoids, on the death of a beneficiary, the risk of a share of assets becoming owned outside the family, and thus enables settled assets to be preserved intact for the benefit of future generations.
Succession Planning
The effect of a trust is to divest the settlor of ownership of the settled assets. Accordingly, upon the death of a settlor there will be no need to obtain a grant of probate or similar formalities (which can be time consuming and costly) in order to deal with the trust fund. A trust therefore provides an efficient vehicle for the transfer of beneficial ownership interests on the death of a settlor. A trust may also be used to protect financially unsophisticated beneficiaries and to make financial provisions for the improvident.
Asset Protection and Confidentiality
Historically trusts were established to protect assets from risk. In a modern context, trusts may be employed to hold assets in a secure and stable political environment. The use of a trust can convert an onshore asset into an offshore one and interposes additional layers of confidentiality in a chain of ownership. The use of the trust and underlying company may also enable trust assets to be held in a jurisdiction which does not recognise the trust concept.
Asset Consolidation
By placing assets into a trust, a client can simplify an asset structure and management can be streamlined.
Privacy
All assets are held in the name of the trustee either directly, or through a nominee or an underlying holding vehicle. This ensures that the identity and interests of the beneficiaries are a private matter not open to public scrutiny.
Sharia Compliant Trusts
Two Seas Trust B.S.C.(c) can provide trustee services which are compliant with Sharia Law and in each case we would tailor the trust deed to meet the particular needs of each individual trust.
For further information please contact:
Two Seas Trust B.S.C.(c)
