What is an offshore trust?
Produced in partnership with Mourant Ozannes and Carey Olsen

The following Private Client practice note produced in partnership with Mourant Ozannes and Carey Olsen provides comprehensive and up to date legal information covering:

  • What is an offshore trust?
  • Differences between offshore trusts and onshore trusts
  • Types of trust most commonly used in offshore planning
  • Discretionary trusts
  • Life interest trusts
  • Hybrid trusts
  • Purpose trusts

What is an offshore trust?

A trust is formed either by lifetime gift or on death when a person (the settlor) transfers assets to another person or persons (the trustees) to hold for the benefit of beneficiaries or for a special purpose. Subject to the terms of the trust instrument, the assets may be simply held by the trustees on the occurrence of a future event or they may be invested by the trustees such that the beneficiaries may then receive benefits from the trust fund, generally in the form of payments of capital or from the income generated by the investments.

A trust is therefore a relationship between three parties: settlor, trustees and beneficiaries. This relationship is based upon the principle of equity whereby legal ownership of an asset (ie title) is separate and distinct from beneficial ownership, and the trustee is bound by a duty of care to the beneficiaries. When a trust is formed, the trust property is legally owned by the trustees while beneficial ownership rests with the beneficiaries. Unless the settlor is included as a beneficiary of the trust, he will cease to have either legal or beneficial ownership of the property transferred to the trustees.

An offshore trust is simply a trust subject to the governing laws of an offshore jurisdiction. The benefits of an offshore trust depend on the governing

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