Most people prefer not to think about what will happen once they exchange the temporary for the everlasting. Failure to prepare adequately only results in unnecessary problems at a time when people are emotionally upset and most vulnerable.
The most common approach is to draw up a will in order to ensure that your estate is administered according to your wishes. Most people however, do not realise that the administration of a deceased’s estate usually take a long time to finalise and can be a costly exercise. Further to the aforementioned the deceased’s assets and bank account are frozen until the final distribution of his/her estate, which means that his/her direct family does not have access to the deceased’s funds.
An alternative solution to making a will is to set up a trust during one’s lifetime. With careful planning this can eradicate delays and costs and provide other benefits such as protecting assets from creditors and/or other litigious actions. The use of trusts as a means of holding and passing on family and/or wealth, even for modest estates, has increased dramatically in recent years.
TRUSTS – THE CONCEPT
Unlike a company, a trust is not a legal entity. It is best described as a relationship; an arrangement whereby property is transferred from one person (the founding trustee) to trust which holds the property for the benefit of specified people or objects (the beneficiaries). A trust deed sets out the terms and conditions upon which the trustees must hold and administer the trust assets. The trust deed also sets out the rights and interests of the beneficiaries.
Those unfamiliar with the trust concept may be concerned about transferring ownership of their property to be managed by other trustees as a trust cannot only have one trustee. These concerns are addressed in the deed of trust by setting out the terms of the management of the trust assets, voting and amendment of the trust. Often the founding trustee have majority voting rights to ensure a certain level of control of his/her assets. All domestic trusts also has an independent trustee (nominated by the founding trustee) to ensure a certain level of objectivity and transparency in the management of trust assets.
Another option to consider is the registration of a foreign trust in another country. This concept might seem unfamiliar and almost intimidating to most people as we tend to associate foreign trusts with “hiding” assets. This could not be further from the truth as having a foreign trust just adds another layer of protection to one’s assets. Simply put, it can be seen as not putting all of your eggs in one basket. Foreign trusts has many advantages and are mainly used for asset and wealth protection and estate planning. When registering a foreign trust, the host country/jurisdiction have to comply with anti-money laundering regulations and will conduct their own due-diligence assessment to determine a potential client’s risk profile and source of wealth. This process can however be done swiftly and a professional trustee appointed to manage the trust assets on your behalf.
Domestic and foreign trusts has many advantages which includes asset protection, estate planning, avoiding delays in the case of a deceased estate and provides a degree of flexibility in granting the deceased’s family immediate access to funds should it be the deceased’s wishes. Trusts are also used for the protection and promotion of continuity of family businesses and assets.
Foreign trust have the added advantages of providing founding trustees with a level of confidentiality as all of the information, including the trustees, beneficiaries and the terms of the trust deed is kept completely confidential and disclosure to third parties will only be granted in very particular circumstances and only granted when accompanied by a court order.
Should you require any further information regarding the registration and management of domestic and/or foreign trusts, please contact Charlaine Kidson from Pittas & Co. attorneys as email@example.com.