For centuries the concept of the trust has been used to safeguard assets. Historically, landowners would place their holdings in trust before going off to war to ensure the assets remained safe, properly managed, and available to their families in case they did not return.
Fundamentally, trusts have not changed in terms of their basic purpose.
There are however mounds of trust law that define the use, purpose, application and implementation of trusts, and this differs vastly depending on the jurisdiction in which the trust is founded.
Though trusts are an old way of ensuring asset protection, this does not diminish either their need or their effectiveness. In fact, in the litigious society we find ourselves in, trusts have never been more relevant as a method of ensuring wealth protection.
Trusts – while simplistic in their effectiveness – can be complex to set up. There is a large amount of minutiae that needs to be considered. One example follows:
In English law, it is not possible to arrange one’s affairs in such a way that the distribution of assets on bankruptcy happens in a way that is not consistent with bankruptcy law itself. In simpler terms, one cannot own something in a way that it passes onto someone other than the creditors upon bankruptcy.
However, if one were to surrender one’s property in the correct fashion, using the correct language and contractual obligations, it is possible that such property must lawfully be granted to a third party in the event of bankruptcy. In that way, you can have your property held in trust, the proceeds of which will go to the third party of your selection, should you be forced to declare bankruptcy.
The devil, as they say, is in the details. The correct founding of the trust, the appropriate trust deed with the appropriate freedoms and limitations, the most suitable jurisdiction – all these and more need to be considered.
At VAULTALITY you gain access to a body of knowledge that is unsurpassed in scope and depth. Whether onshore or offshore, we can provide you with the information you need to make the right choices.