International trusts can provide a wide range of benefits and serve countless purposes, including confidentiality, asset protection, tax minimization, superior financial planning, an investment vehicle, providing for spendthrift relatives, or an essential element of an estate and family succession planning arrangement.
Because legal title to property is no longer held by the settlor in a trust relationship, trusts can protect assets from creditors, or from devastating damages from lawsuits in litigious jurisdictions, or allow you to optimally plan your estate and succession needs while also allowing your heirs to avoid the burdensome and often costly probate process.
Trusts are also often used in combination with International Business Companies, with the trust holding the shares of the IBC, thereby providing an additional layer of confidentiality and protection to the beneficial owners. Trusts have even been used to administer employee payroll and compensation needs.
As the trust relationship is extremely flexible, the use of trusts is essentially limitless.
Here are some examples of common uses of trusts:
- Privacy – Trusts may be created purely for privacy. The terms of a will are public and the terms of a trust are not. For some individuals this element of privacy alone makes the use of trusts ideal.
- Asset Protection – Trusts allow individuals to protect assets they would otherwise own from creditors. By putting property in trust the settlor ensures he is no longer the owner of the property, which extinguishes creditors’ claims. This means that future creditors will be prevented from reaching those assets, even though they may be able to bankrupt the individual. One potential asset protection arrangement can be achieved by creating a Seychelles International Trust for which the unnamed settlor is the protector, and a beneficiary, but not the sole beneficiary. Such an arrangement can allow a settlor to discreetly be in a position to benefit from the trust assets, without actually owning them, which means the assets will be unavailable to his creditors. Such a trust will typically have a completely unrelated name and thereby fully preserve anonymity.
- Corporate Structures – Business arrangements can utilize trusts as holding vehicles for other entities or structures. This can help to maximize efficiency of planning and control of interrelated entities, while also maintaining confidentiality and protecting beneficial owners. For example, a trust may be the sole shareholder of an IBC, thereby allowing beneficial owners to discretely enjoy the benefits of their business.
- Tax Planning – In many situations the tax consequences of using a trust are better than the alternative, and trusts are therefore frequently used for legitimate tax minimization and avoidance.
- Wills and Estate Planning – Trusts frequently appear in wills, and are an effective way to administer an estate.
- Charities – Trusts are often used for charitable purposes, such as the eradication of poverty or education. Seychelles supports the creation of charitable purpose trusts.
- Unit Trusts – Trusts have proven to be so flexible as to be capable of working as an investment vehicle, sometimes called the unit trust.
- Pension Plans – Employee pension plans can be set up as a trust, with the employer as settlor, and the employees and their dependents as beneficiaries.
- Remuneration Trusts – Trusts can be set up for the benefit of directors and employees, or their families, or dependents.
- Co-ownership – Joint ownership of can be achieved by a trust.
- Spendthrift Protection – Trusts can are useful for protecting beneficiaries (e.g., one´s children) against their own inability to handle money. This can be achieved by setting up a trust with a corporate trustee who may only distribute funds to beneficiaries for causes specifically articulated in the trust document.