According to the traditional common law definition – a trust is formed when one person (the settlor) transfers his ownership of an asset to another (the trustee) so that the trustee controls the asset in favor of a third party (the beneficiaries). The settlor – removes ownership and control of the assets. The assets – become assets of the trust owned by the trustee, who is under duty to act in favor of the beneficiary. The beneficiary – has no property rights to the trust assets. The trustee – is obligated to act according to the terms of the trust dictated by the settlor in favor of the beneficiary or the cause.
Although trust law originates from the legal realm, over the years the practice of trusts creation as part of tax planning developed; this is no surprise, since the Income Tax Ordinance provided a clearer definition of the term “trust”.
Beyond narrow tax considerations, trusts have many advantages, including retaining assets, transferring assets between generations, non-governmental supervision, freedom of choice and greater control over the trust assets even after the settlor’s death, charity and philanthropy.
We can advise you whether a certain kind of trust is the right tool for you to express yous wishes in life and after death.