Offshore trust

An offshore trust is simply a conventional trust that is formed under the laws of an offshore jurisdiction.

Generally offshore trusts are similar in nature and effect to their onshore counterparts; they involve a settlor transferring (or 'settling') assets (the 'trust property') on the trustees to manage for the benefit of a person, class or persons (the 'beneficiaries') or, occasionally, an abstract purpose. However, a number of offshore jurisdictions have modified their laws to make their jurisdictions more attractive to settlors forming offshore structures as trusts. Liechtenstein, a civil jurisdiction which is sometimes considered to be offshore, has artificially imported the trust concept from common law jurisdictions by statute.

Official statistics on trusts are difficult to come by as in most offshore jurisdictions (and in most onshore jurisdictions), trusts are not required to be registered, however, it is thought that the most common use of offshore trusts is as part of the tax and financial planning of wealthy individuals and their families. For instance, the founder of Wonga.com, Errol Damelin holds his shares through Castle Bridge Ventures, a trust based in the British Virgin Islands. While the family behind the Nando's restaurant chain, the Enthovens, reportedly use trusts in the Channel Islands as part of their financial planning. Other users of offshore trusts include Sir Ken Morrison, the British supermarket magnate, the Rothermere family who own the Daily Mail group and the late Bruce Gyngell who founded TV-am.

However, offshore trusts have other uses too:

Trusts in general are subject to the rule against perpetuities which, in practical terms, puts limits on the length of time within which all trust property must be distributed. Because of the strictures of the rule, a number of trusts have been struck down in wildly hypothetical circumstances because of possible infringement of the rule (e.g., the fertile octogenarian).

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