Reasons for establishing a trust
To protect wealth
Assets which are not internationally diverse in location are potentially at risk from domestic taxation, exchange control and political constraints. Wealthy individuals therefore typically diversify their investments away from their home country and into different forms (e.g. multi-currency cash deposits, bond and stock portfolios, tangibles, real estate etc). Additionally investment in an overseas apartment or villa for family use are common.
Such diversification brings with it separate problems of management, legal and tax issues, particularly the requirements of countries where those assets are situated for inheritance taxes and formalities.
Tax liabilities
Overseas tax legislation and precedents can be complex and can trap the unwary. The US and the UK for example have wide ranging capital tax provisions which can apply to non-residents who do not have judicious asset structuring.
Orderly distribution of assets
Individuals with international assets often wish to pass these to their heirs in particular ways which may be different from their domestic assets. Even where there is no difference there may be concerns about how the transaction will be achieved in the overseas country.
Confidentiality
The use of a trust adds significantly to the confidential nature of financial dealings, especially in comparison with probate formalities which may be necessary in several jurisdictions if assets are diverse and which are public documents.
Well being of family
Individuals are naturally concerned for their spouse, children and grandchildren particularly after the death or in the event of the incapacity of the individual. For example the wife or children may not be comfortable taking full responsibility for inherited wealth or a father may be concerned that his children may be unduly influenced by a spouse contrary to the father's wishes. Often there are contrary educational and maintenance needs to be met which the Trustee can attend to.
Management of assets
An individual might not find as much time as he would wish to devote to the management of his investments or he may have difficulty in receiving timely information from appointed managers about his investments. The Trustee would handle this on his behalf.
Frequently, a Jersey trust will own a tax free Jersey or British Virgin Islands Private Investment Holding Company which in turn is the vehicle for making investments.
Typically, settled funds are passed down from the trust to such a company by way of an interest free, unsecured loan, repayable upon demand, due to the trust. Depending upon the circumstances, such a trust/company combination can provide additional options, greater anonymity and insulation from domestic taxation.
We provide a complete and co-ordinated financial service to clients encompassing the establishment and management of trusts, private investment companies, money and investment control frequently in conjunction with the clients' chosen advisers, either directly or through our associated offices in the Netherlands, the Netherlands Antilles and Luxembourg.