View a printer friendly version of this page

How does a Trust work?

A Trust is basically an arrangement between a trustee, who holds property and beneficiaries who are the people for whose benefit the property is held and to whom strict obligations are owed. The rules which govern the relationship are firmly fixed and Trustees are subject to very strict duties in respect to the way in which they carry out their obligations to the beneficiaries.

Normally these rules are set out in the Trust Deed which sets out the terms and conditions under which the Trustees hold the assets, and the rights of the beneficiaries. The practical advantages of a trust structure emanate from the distinction drawn between the legal versus the beneficial owner of the assets.

It is essential that when selecting a jurisdiction for a trust that there is a sound trust law in place. Guernsey, UK and Switzerland are reputable, well-regulated finance centres with well-established trust industries.