TRUSTS
Europa Trust Company Ltd is licensed to act as a professional trustee to help our clients with tax and succession planning and, protect assets from unexpected events. Whether you already have established a trust or are contemplating creating one, our trust specialists can guide you through the options to achieve your goals.
A trust is a legal arrangement where the ownership of someone’s assets (settlor) is transferred to someone else (trustee) for the benefit of a third person or group of people (beneficiaries). Usually, the settlor is part of the group of beneficiaries.
There are many reasons for setting up a trust and some of them include asset protection, charitable purposes, and estate and inheritance planning:
Asset protection
Gibraltar trusts can help protect the assets when individuals are required to issue declarations of wealth in their country of residence, or if the political/social situation is unstable.
Tax planning
Gibraltar trusts established for non-residents are not liable to pay tax. Furthermore Gibraltar has no capital gains tax, wealth tax, estate duty, inheritance or death tax. Also there is no stamp duty on transfer of assets which are not located in Gibraltar.
Preservation of family wealth
Gibraltar trusts allow for settlors to settle certain assets which they would not like to be divided by individual family members e.g. property or a marine vessel.
Probate
Assets will be owned legally by the trustee (in his/her official capacity as trustee). When the settlor dies, a will or probate is not required in respect of trust assets. This is likely to save time and money as well avoiding forced heirship of assets, if this is required by law in the country where the settlor is resident.
Preparation and maintenance of financial statements
Avoidance of will disputes
Charitable purposes
How is it set up?
Trusts are setup during the lifetime of the settlor or shortly after his death. They are setup upon execution of either a Deed of Settlement or Declaration of Trust and once the initial trust fund has been settled. Provision for a trust can also be provided in someone’s Will.
The assets of the trust can be held in any currency.
There is no requirement to file the accounts at a public registry (except for asset protection trusts).
Registration is voluntary.
Types of trust
Examples of types of trust are discretionary trusts, fixed trusts, life interest trusts, asset protection trusts and purpose trusts. The most popular type used in Gibraltar is the discretionary trust. A discretionary trust is a trust in which the benefit received by beneficiaries is not fixed by the settlor in the trust deed, but rather, it is decided at the discretion of the trustee.
Parties of a trust
The settlor is the person who makes the settlement establishing the trust, or any further settlements into an existing trust.
The trustee is an individual person(s) or entity appointed by the settlor in the trust deed, given control or powers of administration of trust property.
The beneficiaries are the persons appointed by the trust deed who may receive benefit from the trust.
The protector is a person who is given specific powers of administration or restrictive powers in respect of the trust. The protector is typically someone who is known by the settlor or the beneficiaries such as a family lawyer, accountant or trust practitioner. Appointment of a trust protector is not compulsory.
Letter of wishes
When setting up a discretionary trust, the settlor will usually write a letter of wishes, in which they indicate how they would like the trustees to exercise their discretion. A letter of wishes has no legal standing but it is a useful guide for the trustees on how to administer the trust.