Gibraltar: Trusts In Gibraltar

Last Updated: 16 March 2000
Trust is a legal entity which was devised under Common Law. The parties to the Trust are:-

  • THE SETTLOR - the person who initiates the Trust by gifting into the Trust a sum of money or other assets.
  • THE TRUSTEES - the legal owners and administrators of the Trust assets.
  • THE BENEFICIARIES - the persons who will benefit from the Trust.
The terms of the Trust are set out in a legal document - the Trust Deed which will define the trustees duties and responsibilities, and record the parties to the Trust at inception. In general, there is no requirement to file the Trust Deed or other documents on public record and providing no income arises or is paid to residents of the jurisdiction of administration, no tax is payable in the offshore centre.

There are two types of trust: those with interests in possession and those without. These are commonly known as Fixed Interest Trusts and Discretionary Trusts.


This type of Trust defines the beneficiaries and their entitlement from the Trust, which may be the right to income during lifetime or until some predetermined event.


This type of Trust empowers the trustees to pay income and appoint capital to beneficiaries at their discretion. However, it is customary for the settlor to address a letter of wishes to the trustees outlining his desires with regard to the accumulation and appointment of income and capital. A trust company acting as a trustee will normally take account of such wishes, although the letter has no binding power in law. It therefore must be remembered that a Trust is not merely a legal document but a relationship whereby an individual divests assets to people he can trust to administer them as he would like.


It will be apparent that the choice of trustee is most important for both the Settlor and the beneficiaries; the Settlor is after all transferring the ownership of his assets to the Trustees who will become the registered owners of those assets and they will be responsible for the administration of both capital and income. Very often these matters will be at the sole discretion of the Trustees or as the Trust Deed may direct.

Whilst there are legal remedies available if a Trustee abuses his powers, or acts outside his authority, no client will be happy unless he has total trust and confidence in his appointed Trustees. In these circumstances an ideal Trustee will be a professional person, Trust Company or Bank which are staffed by professionals who will not risk losing either their reputation , livelihood or both.

ECS International Trustees (Gibraltar) Ltd has been established since 1982 with a background of professional staff with both an accountancy and legal background.

ECS International has established an enviable reputation in this area of professional service and is responsible for the affairs of many trust which control many types of assets for the beneficiaries under those Trusts.

It is worth noting that Trusts are not recognised under civil law in countries such as Spain and Portugal. Therefore the lack of legal recognition and anti tax avoidance legislation aimed at Trusts provides tax planning opportunities for foreign residents of such countries.

It is important to note that our company does not provide investment advice to its client trust but engages the services of professional investment advisers who are specifically qualified in these activities.


Gibraltar satisfies the usual factors when considering a jurisdiction in which to establish an Asset Protection Trust namely:

  • politically and economically stable;
  • modern telecommunication facilities;
  • adequate legal, and accounting services;
  • regulated and supervised by a statutory Financial Services Commission;
  • favourable tax laws common law jurisdiction;
  • English language;
The Bankruptcy Amendment Ordinance 1990, amended the Bankruptcy Ordinance in relation to Asset Protection Trust by the introduction of section 42 A clause 1 of which states if:

  • under or by virtue of any disposition made in respect of property the same becomes settled property, and
  • the Settlor is an individual;
  • the Settlor is not insolvent at the date of the disposition;
  • does not become insolvent in consequence thereof, and
  • the disposition is registered in accordance with the requirements of any regulations;
  • such disposition shall not be voidable at the instance of or upon application by any creditor of the settlor.
In addition, clause 2 (a) states:

"notwithstanding the English Law (Application) Ordinance, the Fraudulent Conveyances Act 1571 shall not apply to any disposition to which this section applies."

The definition of "insolvent" in respect of a Settlor means any Settlor whose liabilities both actual and contingent or prospective exceed the value of his assets. Provided that no claim by his creditors shall be deemed to be a contingent or prospective liability of a Settlor who at the time of making the disposition does not have actual notice of such a claim or of the facts or circumstances which may render him liable to such a claim.

The objective factor is therefore the solvency of the settlor rather than the intent of the Settlor.

To take advantage of the Ordinance, the Settlement must be registered with the Financial Services Commission, for an initial fee of o225. The trustees must be regulated and licensed under the Financial Services Ordinance and their due diligence procedures approved by the Commissioner.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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