Trust
Reviewed by A legal arrangement in which a settlor transfers assets to a trustee to manage for the benefit of beneficiaries.
A trust is a legal arrangement, rooted in common law, in which one person (the settlor) transfers assets to another (the trustee) to hold and manage for the benefit of third parties (the beneficiaries). It separates legal ownership from beneficial ownership and is used for succession, asset protection, and privacy.
For internationally mobile, high-net-worth families a trust can be part of wealth and succession planning around relocation. It interacts with inheritance tax, beneficial-ownership disclosure, and the tax rules of the country of residence.
Trusts are characteristic of common-law countries; civil-law jurisdictions often use a private foundation for similar aims, and the recognition and taxation of a trust depend on the jurisdictions involved, so legal advice is required.
FAQ
Do I keep control of assets once they are placed in trust?
Legal ownership passes to the trustee, who administers the property for the beneficiaries. Excessive day-to-day control retained by the settlor can undermine the arrangement, up to a court or tax authority treating it as a sham.
Will a trust have to be disclosed during due diligence?
As a rule yes: the structure, the roles of settlor, trustee and beneficiaries, and the origin of the assets settled are all disclosed. A number of jurisdictions also operate trust registers and beneficial-ownership reporting.
Can the qualifying investment be made through a trust or another structure?
That depends on the program: some require the investment to be made by the applicant personally, others permit structures subject to full disclosure and approval. The position should be checked against the current version of the program rules.
How does a change of tax residency of the settlor or a beneficiary affect a trust?
It can matter a great deal: the new country applies its own rules to trust income and distributions, including anti-avoidance provisions. The tax analysis of the structure is best revisited before the move rather than after it.
Does a trust protect assets from creditors and inheritance claims?
Protection is not absolute. A transfer can be challenged if it was made to the detriment of existing creditors, and forced-heirship rules in some countries limit freedom of disposition. The outcome depends on the law of the trust's jurisdiction and of the countries connected to the family and the assets.