The Purpose Trust Act 1996 has now been enacted onto the statutue book in the Isle of Man. The Act enables a person to form a Cut in the Isle of Man for a period not exceeding 80 years providing the purpose of the trust is:

  • certain, responsible and possible;
  • not unlawful, contrary to public policy or immoral;
  • the trust must be created by deed or will and have at least two trustees and provide for the appointment of a person independent of the trustees to enforce the trust.

The enforcer will have an absolute right to access any information or document which relates to the trust, its assets or administration. The trust is designed for more general use than the usual form of trust in that it will not be for the benefit of particular identified individuals or for charitable purposes.

The uses identified for such trusts include the holding of a structured financing transaction. This will enable the use of the cart for the protection of lenders in a corporate financing transaction scenario. The purpose trust can also be used to hold assets off balance sheet although the effectiveness of this will depend on accounting regulation. Other uses include part charitable trusts and trusts required for purely specific commercial purposes.

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.

Further information is available on the scheme from Bruce Taylor, PO Box 250, Grosvenor House, 66-67 Athol Street, Douglas, Isle of Man IM99 IXJ, Tel: +44 (0) 1624 672332, Fax: +44 (0) 1624 672334.

Vist Our Web Site at Click Contact Link