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Traditionally trust is one of the tools for tax optimization, as means
of securing assets. International evolution of legislation and law
enforcement has led to different interpretations of the concept of
different systems of law.
The countries that adopt the British system of common law (of which
include Cyprus, the British Virgin Islands, Belize, New Zealand,
Panama) become a founder of the concept of trust and mutually recognize
trusts of each other.
On the contrary the countries of continental legal systems do not have
trust notion at all with few exceptions.
For example, some European states (eg, Luxembourg, Austria,
Liechtenstein), as a result of convergence of legal systems, not only
recognize the trust created in common law countries, but also
consolidate the possibility of regulatory agencies in their territory as
a proper trust and legal persons, dubbed the funds - original
derivatives Trusts. The object of ownership trust can be any property,
except as prohibited in some countries.
In the Russian Federation in accordance with Art. 209 of the Civil Code
"transfer of property in trust does not involve the transfer of
ownership to the trustee, which actually means the absence of the
possibility of organizing a trust. A popular solution of this question
is as follows: assets (property, stocks / shares of companies, etc.) is
not transferred to a trust directly, and are issued on a company
registered in the jurisdiction belonging to the general system of law.
And shares of the offshore company are transferred to the trust, the
beneficiary of which is a resident of the Russian Federation.
Typical scheme of a trust is as follows: Founder of the Trust -
transfers its assets (Trust Fund - an isolated part of the property
Settler) to another person - trust manager or trustee (Trustee) - so
that the latter holds assets, as well as to deal with these assets for
the benefit of the settler or any other person (the beneficiary), said
the founder, or for any purpose specified in the Trust.
a trust is a relationship whereby property (including real, tangible and
intangible) is managed by one person (or persons, or organizations) for
the benefit of another. A trust is created by a settlor (or feoffor to
uses), who entrusts some or all of their property to people of their
choice (the trustees). The trustees hold legal title to the trust
property (or trust corpus), but they are obliged to hold the property
for the benefit of one or more individuals or organizations (the
beneficiary, cestui que use, or cestui que trust), usually specified by
the settlor, who hold equitable title. The trustees owe a fiduciary duty
to the beneficiaries, who are the "beneficial" owners of the trust
property.
Making a decision on the establishment of trust is important to
understand that in this case the control of the property transferred in
trust can be lost. On the other hand, trust agreement which does not
make possible for the founder to dissolve it unilaterally, could hardly
be recognized fictitious by the court. This substantially increases the
degree of assets security from the claims of creditors.
Advantages of trusts:
1. Asset protection, since the property transferred in trust, cannot be
addressed claims of creditors and third parties.
2. Working and legal schemes of tax optimization both for individuals
and legal entities. In many countries property managed by a trust is
protected from several taxes (notably on inheritance, capital gains,
property tax).
3. Anonymity and security of the founders and information about them. In
countries where it is allowed to own property through a trust,
information is usually not disclosed on their grantors and
beneficiaries. It also helps to save the property from creditors;
4. Pension and insurance schemes of long-term motivation of staff. A
significant number of companies, often large and famous, use the scheme
of property ownership through the trust as a method of long-term
motivation of staff (through the provision of various schemes of
additional remuneration, which is accumulated in a trust and then paid
to the employee). The most popular scheme of additional corporate
pension arrangements, which allow a trust to accumulate retirement
savings of employees;
5. Owning property jointly with other owners. Trust is a convenient
mechanism for co-ownership and property management, which also often
helps to minimize problems and disagreements among the owners in the
division of property;
6. Inheritance and security of property until a certain age to inherit.
As in medieval England, trusts are still popular as a scheme of
succession, when the heirs are not able to dissipate assets too early;
Trust, like most organizational and legal forms of property
ownership, have some drawbacks:
1. The owner, in most cases loses control over the assets, although only
formally. The existing judicial practice demonstrates that there are
cases where the trustee of trust is ineffective or maliciously
administers entrusted to him property management;
2. In many countries, particularly in the U.S.A., there is legislation
restricting the right of its citizens to transfer property in trust.
Upon transfer of property in trust founder is obliged to pay a
significant tax or fee.
3. In some countries the law does not recognize as legitimate trust
arrangements (eg, Russia), it can cause certain difficulties in case the
assets managed by the trust in such jurisdictions.
Specialists of West Union Group will be pleased to offer you a qualified
personal consultation on issues related to registration and maintenance
trusts, including the structure of international holdings. We can offer
you advice and registration of trusts in the most popular countries:
• Liechtenstein (in the form of Trust company, fund or institution).
• New Zealand (in the form nonresident trust).
• British Virgin Islands (including in the form of the most profitable
forms - according to the law «The Virgin Islands Special Trusts Act» -
VISTA).
• Panama (in the form of an ordinary trust)
• Cyprus (in the form of resident, offshore trusts or international).
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