A trust is a highly flexible, bespoke private arrangement which can be structured to meet the individual needs of the client. A trust is a highly flexible tool in estate planning and private wealth management.
The trust is a legal relationship which is usually created by private arrangement between the original owner of the asset (the ‘Settlor”) and the persons to whom the asset is transferred (the “Trustee”). The Trustee merely holds the legal title to the property whereas the beneficial ownership (i.e. the right to enjoy or benefit from the property) rests with the beneficiaries of the trust. The effect of creating a trust is to shift the burdens of property ownership onto the Trustee while retaining the benefit of the property oneself or with one’s family who would typically be the beneficiaries of the trust. The Trustee would manage the trust for the benefit of the beneficiaries and in accordance with the Settlor’s expressed wishes.
Trusts can be established as Discretionary Trusts, Charitable Trusts, Employee Benefit Trusts, Asset Protection Trusts, Non-Charitable Trusts and Purpose Trusts.
The uses of a trust include:
- To minimise or defer tax payable.
- Avoidance of forced heirship and succession laws under the Trusts Act.
- Facilitate the orderly transfer of property to future generations.
- Protection from divorce proceedings.
- Ownership of special purpose vehicles.
- Charitable purposes.
- Consolidate ownership of assets.
- Enhance confidentiality.
Advantages of using a Mauritius trust include:
- Tax benefits.
- Asset protection.
- Consolidation of assets.
- Mitigation of probate complexities, preservation of family property and protection against political risk.
- No registration or filing requirements.
- Extensive powers may be given to the Protector.
- Maximum duration of 99 years for discretionary trusts.
An alternative to the trust is the establishment of a foundation. The foundation offers similar advantages as listed above but, additionally, the foundation can apply for a certificate of incorporation with the Registrar of Companies of Mauritius and can thus exist as a legal person.
We have experience in respect of:
- Drafting of the trust instrument or foundation’s charter.
- Working together with management companies for the establishment of the trust or foundation.
- Drafting documentation in respect of transfer of jurisdiction of trusts or foundations.
- Legal advice.