Briefing - 01 January 2016

How we use Trusts

Hawksford’s private client offering is built on long-term, steadfast and personal relationships, founded on a deep understanding of what matters to them now and in the future.

Flexibility and confidentiality are the principal advantages of using a trust. Whilst there are many other forms of legal structures designed to hold, preserve and protect wealth, trusts continue to demonstrate that they are enormously adaptable when it comes to financial planning. The ways in which trusts are used by individuals, families and companies continues to grow. However, some typical applications Hawksford use them for are as follows:

Preservation of wealth

Trusts may be used to preserve the continuity of ownership of particular assets, such as a property or commercial business, within a family. By vesting legal ownership of the assets in the Trustee, the relevant individuals may be able to continue to benefit from the assets, whilst avoiding fragmentation of ownership amongst a large number of second and third generation beneficiaries. The use of a trust avoids, on the death of a beneficiary, the risk of a share of assets becoming owned outside the family, and thus enables settled assets to be preserved intact for the benefit of future generations.

Forced heirship

Where a settlor disposes of their assets during his/her lifetime by settling them on a trust, the trust assets will not form any part of the settlor's estate upon his/her death.

This may enable a settlor to avoid forced heirship rules which may be mandatory under the laws of his domicile, residence or nationality and which would otherwise dictate who will benefit from the settlor's estate as well as the proportions to be settled.

Succession planning

The purpose of a trust is to divest the settlor of ownership of the settled assets. Accordingly, upon the death of a settlor there will be no need to obtain a grant of probate or similar formalities in order to deal with the Trust fund. A Trust, therefore, provides an efficient vehicle for the transfer of beneficial ownership interests on the death of a settlor. Furthermore, because the interests of a beneficiary under a discretionary Trust will not constitute a separate asset under Jersey law, a Trust structure may assist in the avoidance of stamp duty or inheritance taxes which might otherwise be payable on the death of a beneficiary.

In addition, a trust can be used to hold shares in a company owning immovable property situated outside Jersey, such as real estate, rather than these being held directly by the company. This can present attractive opportunities for tax and financial planning. A trust may also be used to protect financially naïve beneficiaries as provisions can be put in place to make financial contributions where appropriate.

This information is intended to provide a general guide on the use of trusts and give a broad indication of potential planning opportunities. It should not be taken as detailed advice. You should not act or refrain from acting on the basis of this general outline without taking professional advice on the specific facts of your case.

Back to top