TRUSTS

TYPES OF TRUSTS (Testamentary VS Inter-vivos)

The use of trusts for estate planning and other purposes began in the 12th Century at the time of the Crusades.  The trust concept has grown in common law around the world, becoming the single most used vehicle to pass and protect assets from one person or generation to another.

There are two types of Trusts – Testamentary Trusts and Inter-vivos Trusts.  Testamentary trusts are established under a Will and are funded at death.  Inter-vivos trusts (the words “inter-vivos” meaning “in life”) are established and funded during your lifetime.

PLANNING WITH INTER-VIVOS TRUSTS

The concept of the inter-vivos trust is primarily used to transfer the legal ownership of property to a trustee to be held, managed and distributed to the trust’s beneficiaries.  In common law, the donor of the assets is referred to as a Settlor.  With the maturity of the trust industry, these structures are often identified by their purpose or the nature of the assets in the Trust.

The ETICAS International group of Trust Companies provide a full range of Trust Solutions including:

• Insurance Trusts – a trust which is both the owner and beneficiary of one or more life insurance policies.  On the death of the insured, the trustee invests the insurance proceeds and administers the trust for the benefit of the beneficiaries.  This type of trust may reduce the estate or inheritance taxes on death.
• Granny Trusts –  these trusts are established by a family member in one jurisdiction for the benefit of beneficiaries in another jurisdiction.  This may be a tax effective strategy for certain individuals who wish to benefit their Canadian tax resident family members.  It is possible, that within certain parameters, neither the trust nor the distributions to Canadian beneficiaries will be taxable.
• Asset Protection Trusts – as the name implies, these structures may effectively protect assets from future creditors.  Asset protection has become one of the most important goals for many individuals as not only are they concerned about frivolous lawsuits brought against them but also against their children and grandchildren in the future from commercial claims and personal liability claims to name just a few.  For effective asset protection, the Settlor must be:- Solvent at the time of the transfer of assets to the trust
  – Trust assets are not the proceeds of crime
  – The transfer to the trust is not a fraudulent conveyance (a transfer done to avoid an existing and known creditor)

If these conditions are met, most creditors will be frustrated in their attempt to access the trust assets.

• Purpose Trusts – a Purpose Trust is a trust which does not have beneficiaries, but instead exists for advancing a non-charitable purpose.  These are often used for facilitating escrow arrangements, commercial transactions or to own certain assets like a Private Trust Company.
• Private Trust Company (PTC) – a PTC is a company whose sole purpose is to act as trustee in relation to a specific or group of trusts.  PTC’s do not provide trust services to the public but only to related parties.  PTC’s allow the settlor or his/her representatives to sit on the board of the PTC, giving them greater access to the workings of the trusts.

GLOBAL EXPERTISE

ETICAS International maintains a global perspective in its delivery of Fiduciary solutions and services.  With a deep understanding of our clients’ needs and objectives, we select appropriate jurisdictions and provide customized compliant structures.

With over 40 years of experience in providing appropriate Trust and other structures to Ultra High Net Work clientele, ETICAS has developed a global network of elite professionals to serve our clients’ interests.  Developing effective Trust and corporate structures often requires a team of professionals including Legal, Tax, Accounting, Insurance and Financial planning.  Through our network and relationships, ETICAS can provide a holistic approach to servicing our clients, from any jurisdiction around the world.