If you are conducting an international business, you probably came across such a concept as a “trust”, or perhaps you even wanted to register a trust in Cyprus or, for example, open a trust in the BVI. In today's article we will consider the following:
The concept of “trust” arose relatively recently, but the transfer of property to the trusted persons to handle it for the benefit of the family was practiced for many years by knights participating in the Crusades.
Later, the transfer of assets to “trusts” had become a kind of protection from the creditors of trust founders, as well as from the monarchs. The church was appointed the trustee, as it had special rights, and its property could not be confiscated.
Later, the church also began to provide the services of property management, taking advantage of this position. But periodically there were situations in which the trust managers refused to return the property, citing the fact that it was donated.
Thus, it became necessary to resolve such disputes legally. Through the king’s instructions to “find a way of solving the problem” the so-called “Equity law” was appeared.
Later, in the 16th century, such a transfer of property became an alternative to testaments and an effective way to evade inheritance tax.
A trust is a fiduciary relationship in which the founder of the trust transfers property to the trustee to handle it in the interests of the beneficiary.
If you want to register a trust in the Isle of Man or in New Zealand, then refer to our company specialists for professional help and advices.
You should know that a trust exists only through a trust agreement and is not a legal entity. In addition, the trust does not belong to the beneficiary, nor the founder of the trust, nor the trust.
If you decide to register a trust in Cyprus or set up a trust in Singapore, note that a trust will be considered as legally formed when you meet these 3 conditions:
This is the classical structure of a trust, but if you decide to set up a trust in Panama or register a trust in Liechtenstein, you should know that it also includes a protector. He has the right to challenge or control the actions of the trustee.
There is a written document under which you can set up a trust in the Czech Republic or in other jurisdictions of your choice.
It is called a “trust agreement” and is intended to specify:
Those wanting to register a trust in Hong Kong or in any other state must know the structure of the trust agreement:
To set up a trust in Cyprus you should choose a suitable trust structure. As we said earlier, there are simple (founder-manager-beneficiary) and standard (founder-manager-beneficiary-protector) structures of trusts, but there can also be a complicated scheme where a private trust company is included and the trustee manages the shares of such a company.
Through the trust it is possible to maintain the confidentiality. Since the trust is not the property of the beneficiary or the founder, the property is protected from lawsuits. Therefore, we can talk about asset protection.
With proper planning and management, it becomes possible to reduce the tax liabilities. Also, the long-term ownership and management of assets become possible. It is worth noting that a trust is a great alternative to testaments with a high level of privacy.
The Isle of Man
To set up a trust on the Isle of Man, you need to contact our specialists, who will tell you in detail about all the nuances of this procedure. It is important to know that if the beneficiary is not a resident of this jurisdiction, then there is no income and capital gain taxes. The maximum period of trust validity in this state is 150 years.
According to the legislation of jurisdiction, no state registration is required. In addition, there are no restrictions on the assets of the trust and their geographical location. The interests of the beneficiaries can be protected by the court, and trustees have a high degree of responsibility.
If you are intended to open a trust in Cyprus, the founder and beneficiaries must be non-residents, and at least one trustee must be a resident. The period of trust validity in this country is not limited (previously the period of validity was 100 years). If the beneficiaries and sources of income are outside the state, then there is no need to pay tax. The stamp duty is 430 euros. The trustee must act in accordance with the law, which is aimed at anti-money laundering.
The Russian Federation
Setting up a trust in the Russian Federation at the moment can be a problematic. It is likely that things may change over time, but for now, we recommend paying attention to other jurisdictions and to register a trust in the Czech Republic or register a trust in Liechtenstein.
You can find out more about trusts in these and other countries by contacting our lawyers.
It is worth remembering that transferring the property for a trustee, the founder and beneficiary does not have the right to manage the trust and cannot control the actions of the manager.
Therefore, in order to set up a trust in Cyprus or open a trust in Singapore, you must find a reliable trustee. Also, you should be careful when drafting the contract. We will help you to draw up an agreement properly and to avoid troubles or unforeseen situations in the future.
There are many misconceptions about the trust. Therefore, if you want to set up a trust in Hong Kong or register a trust in BVI, please, consider the following:
If you are interested in registering a trust in England or you would like to set up a trust in Liechtenstein, then IQ Decision experts will provide you with a full range of consulting and legal support services.
For more information, please use the contacts listed on the site.
The information outlined in the article is actual at the time of its publication. Please refer to our specialists for checking possible solutions for your business.