Wealth Protection: Trusts 101 in Plain English

Asset-protecting trusts protect wealth and provide tax saving solutions. Trustees transfer asset ownership to third parties, which shelters the funds from creditors and the tax man.

Who Should Benefit From a Trust?

Most trusts directly benefit the family of a trustee, the person who establishes the trust. Sometimes, charities are a trust’s beneficiaries. In fact, some jurisdictions only allow charities to profit from trusts. So, before establishing one, do jurisdictional research because rules vary from region to region.

Should a Trustee Control Distributions

In the past, most trusts named a “fixed interest” — usually a spouse, offspring, or sibling — to control the fund. These days, however, it’s not uncommon  for trustees to maintain control over trusts they, themselves, set up. Controlling trustees use non-binding letters to assure interested parties that their wishes will be carried out.

Can a Trust Go into After Death?

Someone who wishes to maintain complete control over assets while alive can arrange for a posthumous trust in their will.

What is a Protector?

A final consideration in trust formation is the protector. A protector can either be a relative or an advisor who serves as a check on the trustee. A protector’s power can vary. Still, it should be noted that courts are wary of protectors who show the tendency to be “over-protective.”

British Virgin Island and Cayman Trusts

High-net-worth individuals frequently use trusts anchored in the British Virgin Islands and Cayman. These territories use mainstream common law standards, and transactions are structured in a way that eliminates the need for non-resident trustees to employ two sets of lawyers.