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How to establish a trust properly and get powerful asset protection in Nevis
The benefits of a trust are immense. There are actually very few structures that can compare with the trust when it comes to asset protection and estate planning. However, this level of protection is only achieved if the structure is set up properly. Even the slightest comma or any sentence that’s open to interpretation can have negative results.
The worst-case scenario is that the trust is declared invalid, but it doesn’t have to come to that. These details can result in the assets being used in the opposite way as intended by the settlor.
When Mundo readers ask us how to set up a trust fund, we send them a list of requirements that they need to comply with. But let’s not forget that the real craft of building a trust lies in the ability of the lawyers or legal agents responsible for drafting the deed and registering the trust.
Another good question (that you should not refrain from asking) is ‘where’? The laws and legislations of a jurisdiction have a great impact on the trust’s performance regarding taxes, possibility to add beneficiaries, types of assets allowed, duration of the trust, etc. This is why Mundo recommends a Nevis international trust company which, in combination with a holding structure can bring you great asset protection benefits. You’ll find that the Nevis trust cost is even quite decent if you consider the benefits you get.
All in all, we have drafted this article so you can know ‘how’ and ‘where’ to establish your fiduciary structure. Readers should know that this article intends to provide information regarding the legal aspects and it’s not particularly focused on the requirements and documents that you’ll need to gather.
How to create living trust structures in Nevis with solid asset protection benefits
Certainty of intention
For a trust to be valid there has to be a clear intention from the settlor. The trust deed must reflect beyond any doubt that he/she intended to:
a-Separate herself/himself from the assets.
b-Grant these assets to a third party for custody or administration under the settlor’s wishes.
Certainty of matter
The deed must reflect the exact assets that are to be under custody or distributed among the beneficiaries. Although it may seem obvious, the deed cannot read ‘I give this person permission to live in one of my properties and get a reasonable income from the rest of them’.
It’s clear that ‘reasonable’ is not an objective term and that the court may hesitate when it comes to assigning one of the properties to which the beneficiary is entitled.
There is a famous case (Re London Wine Co (Shippers) Ltd) where the creditors of a bankrupt wine house were not able to claim their share. The creditors argued that they should receive the wine bottles that they paid for, but these were not specified. Even though they had made a payment it wasn’t clear how many bottles or what types of wine they were supposed to get.
One may argue that there was a similar case with Hunter v Moss. In this case, there was a number of 50 company shares (out of 950) to be transferred to an employee. Yet, the ruling was completely opposite because the company shares are all the same type and have the same value, unlike bottles of wine.
These two examples show the importance of declaring the trust assets thoroughly. Such a point is to be considered when you are pondering on how to establish a trust. Needless to say that these matters need to be discussed in detail with your Mundo lawyer.
Certainty of object
Establishing exactly who the beneficiaries are is also vital to avoid the trust being set aside due to ‘uncertainty’. Here we have three options: fixed trusts, powers, and discretionary trusts.
If you are wondering how to establish a trust, remember that a fixed trust is the strictest option. In this case, you have to establish who are your beneficiaries exactly. Rather than appointing a group of people (like ‘employees’, ‘members of a sports team’, etc.), you have to assign beneficiaries with their names and IDs.
There is also the option of granting a mere power. Thus, a third person is able to dispose of your assets and transfer them at its discretion. We can see the difference between a fixed trust and a mere power through the following sentences: ‘The trustee shall give USD 1,000 to X’ as opposed to ‘The trustee may give USD 1,000 to X at its discretion’.
Discretionary trusts provide a nice balance between the two previous examples. Such structures stipulate that the trustee must assign the assets to beneficiaries with some level of flexibility. That is, subject to certain conditions.
Nevis international trust company
The next question we need to answer is ‘where’, and Mundo has a solution: Nevis. A Nevis trust in combination with a holding company brings a strong asset protection solution. Our Mundo experts have created many such combinations and can guide you on your path toward asset protection in Nevis.
Firstly, there is wide flexibility in terms of the assets. Your Nevis trust can allocate investments, LLCs, and bank accounts. You can also put offshore accounts (do the names Cayman Islands, Switzerland, or Luxembourg ring a bell?), real estate, and stocks under the trust’s protection.
Also, by adding a holding company (ask our experts about our LLC options) you can increase the level of protection. Think about it the following way: when you transfer your assets to a trustee you relinquish control over them. This is the price you pay for keeping them safe from creditors, governments, and other potential threats.
However, for some assets, there is another choice. If you put your assets under a holding company and the said company is owned by a trust, you have the perfect solution. You can appoint yourself as the manager of the company so that you can control the assets. Yet, they will not be yours but the company’s, which is conveniently property of the trust, hence, it cannot be touched.
With these combinations, you can create marvels when it comes to asset protection structures and the best part is that it’s all legal.
What can Mundo do for you
Mundo is an online publication dedicated to international business and perpetual travelers. Our philosophy is clear: we strive to achieve ultimate freedom.
This is why we have partnered with the best banks, corporate providers, and financial consultants in the top business jurisdictions. Moreover, our Nevis partner is an important one. We are talking about NTL Wealth, our parent company that has been around since 1994.
NTL is the pioneer in trust services on the island of Nevis and one of the main providers of citizenship by investment services in the Caribbean.
A consultation with our experts is only one click away. You don’t know how to set up a trust fund? Contact your Mundo representative now and get all the information you need.
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