There are many reasons why a person may wish to create a trust. The following are some of the most common:
- To protect assets from the effects of taxation, exchange control and the risks of expropriation by foreign authorities.
- To achieve confidentiality.
- To dispose of the beneficial ownership of assets before taking up residence or becoming domiciled in a country with high gift, capital or income taxes.
- To avoid dissipation of family wealth by virtue of, for example, bankruptcy or marriage.
- As a means of relinquishing legal ownership while retaining some enjoyment of assets (for example the occupation of real property).
- To create a separate and specific fund to provide for, for example, mentally handicapped members of the family.
- To create a vehicle that will hold assets separate from the rest of the settlor's estate and which may continue irrespective of his death. This will, for example, minimise formalities such as probate and thus speed up distribution of assets to heirs or alternatively will enable a more carefully planned distribution of assets to take place.
- To minimise the costs involved in any personal financial planning exercise the absence of audit requirements (unless required by the deed) and regulations generally can make a settlement a less costly financial vehicle to operate than a company.
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.
