Updated
GL-T-06
Glossary · Structures and trusts
Trust - assets held by a trustee for the beneficiaries
A legal structure: you transfer assets to a trustee who holds them in the interests of the beneficiaries. Used for asset protection, inheritance, and confidentiality. Popular in the UK, Jersey, and the BVI.
01 / In 30 seconds
The short answer
- What it is
- An arrangement in which assets are transferred to a manager (the trustee) for the benefit of beneficiaries
- Why
- Asset protection, inheritance, planning
- Parties
- Settlor, trustee, beneficiaries
- Important
- Requires transparency towards the tax authority and the bank
- Can you prepare
- Yes: build the trust for its purpose and disclose it honestly
02 / In plain words
What Trust means
A trust is a legal arrangement in which you (the settlor) transfer your assets to the management of a trusted person or company (the trustee), who deals with them for the benefit of the people you have named (the beneficiaries). Formally the assets are no longer yours — they belong to the trust, but they operate under the rules you set when it was created.
Why it is needed: protecting assets from risks and claims, orderly inheritance without lengthy procedures, planning the transfer of capital to children and confidentiality within permitted limits. Trusts are especially common in Anglo-Saxon law and are often used by wealthy families for long-term planning.
An important point: a trust is not a way of hiding assets from the tax authority. Modern rules require beneficiaries to be disclosed and often tax the trust’s income on the settlor or the beneficiaries (anti-avoidance rules, CFC-like rules). That is why a trust is built transparently and with the tax consequences calculated, not as a tool of concealment.
A case from practice
A wealthy family creates a trust to put its inheritance in order and protect its assets. The assets are transferred to a trustee, and the beneficiaries are the children. The structure is disclosed honestly to the bank, and the income is accounted for under the tax rules. That way the capital passes to the children without lengthy procedures or disputes.
Why trusts are used
- Protecting assets from risks
- Orderly inheritance
- Transferring capital to children
- Long-term family planning
- Confidentiality within the law
- Structuring worldwide assets
03 / What it covers
How a trust is structured
Parties
- The settlor (you)
- The trustee (manager)
- Beneficiaries
Assets
- Transferred to the trust
- Managed under the rules
- For the benefit of the beneficiaries
Why
- Asset protection
- Inheritance
- Planning
Transparency
- Disclosure of beneficial owners
- Tax on the settlor/beneficiary
- Not concealment
04 / How it works
How to create a trust
Define the purpose and assets
What is transferred, to whom and on what terms.
Choose the jurisdiction and trustee
The jurisdiction's law and a reliable trustee for the family's goal.
Establish the trust and transfer the assets
The trust deed and re-registration of the assets to the trustee.
Disclosure and tax accounting
Beneficiaries are disclosed to the bank, income is reported under the tax rules.
A working structure
The trust manages the assets under the agreed rules.
05 / Key facts
What you need to know
01How it works
Three parties
The settlor transfers the assets, the trustee manages them, the beneficiaries benefit under the settlor's rules.
02Why
Succession and asset protection
Capital passes to the children without lengthy procedures, and the assets are separated from the settlor's personal risks.
03Where it is common
Common law
The UK, Jersey, the BVI and other common law jurisdictions.
04Tax
A trust does not hide income
Beneficiaries are disclosed to the bank and the tax authority; trust income is often taxed in the hands of the settlor or the beneficiaries.
Common mistakes
Setting up a trust to hide assets
Build the trust for succession and asset protection, and disclose it honestly.
Not calculating tax for the settlor and beneficiaries
Work out the tax consequences under their residence before transferring assets.
Choosing a jurisdiction out of habit
Check the trust jurisdiction's law against the rules of the country where the family lives.
Creating a trust only on paper
Actually transfer the assets and let the trustee manage them.
06 / Expert advice
How to prepare in advance
A trust is built for its purpose (asset protection, inheritance) and transparently: a jurisdiction and a reliable trustee are chosen, the tax consequences for the settlor and beneficiaries are calculated, and preparations are made to disclose the structure to the bank and the tax authority. Then the trust solves planning tasks rather than creating risks of concealment.
What we do for you. We help build a trust for your purpose — asset protection and inheritance — transparently and with the tax consequences calculated. We choose the jurisdiction and the trustee and prepare the structure so that it solves planning tasks rather than raising questions with the bank and the tax authority.
Dmitry NagyTax consultant, international taxation and compliance (ex-Big4)
07 / Questions
Frequently asked questions
An arrangement in which you transfer assets to a manager (the trustee), who deals with them for the benefit of the beneficiaries under rules you set. Formally the assets belong to the trust.
No. Modern rules require beneficiaries to be disclosed, and a trust’s income is often taxed on the settlor or the beneficiaries. A trust is a planning tool, not a concealment tool.
For asset protection, orderly inheritance, transferring capital to children and confidentiality within the law.
A trusted person or company that manages the trust’s assets for the benefit of the beneficiaries under the rules set by the settlor. Choosing a reliable trustee is critical.
Often, yes — on the settlor or the beneficiaries, under anti-avoidance and CFC-like rules. The tax consequences are calculated in advance for your residence.
A trust is a relationship without a separate legal entity; a foundation is a legal entity in its own right. The choice depends on the jurisdiction and the planning goals.
Related terms
INITIAL ASSESSMENT
Tell us what outcome your family needs
We will design a solution for your case, choose the country and the right status, and take the whole process through to the result.
