A trust is an arrangement by which one person (the settlor) transfers assets to another person (the trustee) to be held for the benefit of a third person (the beneficiary). The legal title to the assets is then vested in the trustee with equitable interest in the assets belonging to the beneficiary.

REASONS FOR MAKING A TRUST

Trusts in Gibraltar are completely private. There is no requirement for registration with any public body, other than in the case of certain asset protection trusts. (see separate information).

• to dispose of property to be held for benefit of children and succeeding generations or where there is a lack of legal capacity for absolute ownership;
  
• to protect personal assets;
  
• Accumulation and Maintenance settlements for education and maintenance of children and succeeding generations;
  
• to promote charitable or similar worthy causes
  
• to protect against financial or political instability or unreliability.

GIBRALTAR LAW

Gibraltar is a common law jurisdiction and law governing trusts is similar to that of the United Kingdom, being based originally upon the Trustee Act 1893. Gibraltar law has the advantage over most other jurisdictions of being totally derived from English law, from which trusts were originally developed and which offers the greatest flexibility and security for both the settlor and beneficiary. The legislation allows a maximum perpetuity period of 100 years and places limitations on the time during which income may be accumulated.

TYPES OF TRUST

There are essentially two types of trust: those with an interest in possession, and those which are discretionary. An interest in possession trust is one where the beneficiary or beneficiaries are entitled to the income arising directly from the trust property or from the use of the trust property, either for life or until some predetermined event. The discretionary trust is perhaps the more common form of trust used by offshore advisers, the intention being to accumulate income and capital gains over a long period.

In respect of discretionary trusts the trustees have power to choose between a group of beneficiaries when distributing trust funds. No particular beneficiary can therefore be said to have a defined interest under the trust, and his potential benefit is not taxable. The trust deed may take the form of a Declaration of Trust which does not name the settlor.

In their administration of the Trust, the trustees have discretion over the management and distribution of the Trust fund, but may be guided by a Letter of Wishes from the settlor. The Letter can set out who the settlor would like to benefit from the Trust, both during his lifetime, and after his death. The letter is not legally binding upon the trustees and may be reviewed or amended as circumstances change. This is a useful alternative to a will which does not require probate.

TAXATION OF TRUSTS

The income of a trust created by a non-resident of Gibraltar is exempt from Gibraltar tax, provided that no Gibraltarian or resident of Gibraltar is a beneficiary, and that the income is derived from outside Gibraltar (excepting income from bank deposits or exempt/qualifying companies)

FIRST ROCK TRUSTEES LIMITED

First Rock Trustees Limited is licensed by the Gibraltar Financial Services Commission to provide company, ordinary trust and asset protection trust management services.

For further information, please contact:

Bernard Hazell – Resident Director – email: bernard.hazell@moorestephens.gi

Cindy Glasby – Legal Compliance Officer – email: cindy.glasby@moorestephens.gi

Linda Matthews – Trust Manager – email: linda.matthews@moorestephens.gi

We believe the information to be correct at the time of going to press but we cannot accept responsibility as a result of acting or refraining from acting as a result of any item herein.