Trusts

Typical uses to which Jersey trusts are put are:

• Securing continuity in the ownership and management of assets - once gifted into trust a particular asset no longer forms part of the settlor’s estate and so title to it is unaffected by his/her death.
• Planning for estate duties and capital taxes - Although a transfer into trust of an asset will in certain legal systems become a taxable event, thereafter assets held by a corporate trustee can remain in the same ownership for 100 years plus. This offers an unrivalled opportunity to plan for and reduce the frequency of capital and estate taxes.
• Asset protection - Some settlors may feel that their ability in future to enjoy their assets may be subject to challenge. This may be because of political unrest in their place of residence or because they fear contested matrimonial proceedings or even bankruptcy. It is perfectly acceptable for a settlor to be a beneficiary of a trust created by him/her. In this way settlors can remove assets from their estate without having to cease benefiting from them altogether.
• Inheritance restrictions - Many jurisdictions impose restrictions upon an individual’s freedom to divide their property after his/her death as s/he would choose. For rich parents the prospect of a child’s entitlement at an early age to significant wealth can be a source of great concern.  It may undermine their determination to complete their education or expose them to the attention of bounty hunters. Transfer of assets to Jersey trusts specifically protects them against the claims of a settlor’s forced heirs. This in particular allows settlors from civil law jurisdictions undreamt of freedom to manoeuvre in the disposal of their estate. Trusts also allow provision to be made with the utmost discretion for the welfare of an individual towards whom a settlor may feel a moral responsibility.

Trusts are used to address commercial as well as domestic problems:

• Where the future success of a private company could be jeopardised by dispersing ownership and control amongst too many people, a trust (in particular when combined with a distinction between shares with voting rights and shares with dividend rights) allows greater freedom in managing the control or dividend flows of privately held companies.
• Multinational companies may need the assets of in-house insurance arrangements or employee benefit schemes to be held separately from those of the enterprise itself. A trust can prove invaluable for holding assets on behalf of large and fluctuating groups of persons and yet sheltered from the commercial risks to which the parent company is exposed.