 |
| Isle of Man Crest |
A trust is a legal concept recognised almost without exception in common law countries (i.e. those countries that have been subject to past English influence). One of the most widely accepted definitions of a trust is drawn from the book, Law of Trusts and Trustees by Underhill & Hayton.
"A trust is an equitable obligation, binding a person (who is called a trustee) to deal with property over which he has control (which is called the trust property), for the benefit of persons (who are called the beneficiaries or cestuis que trust), of whom he may himself be one, and any one of whom may enforce the obligation."
Legal ownership and direct control of the trust property must be transferred to the trustees. The trust is created by written document, the trust deed, which will express the terms on which the trustees must administer the trust property.
Historic records show that the Isle of Man Courts have for very many years followed similar principles of equity and trust law to those recognised by the English Courts. The current body of legislation in the Isle of Man relating to private express trusts is contained in the following Acts of Tynwald: i) the Trustee Act 1961, ii) the Variation of Trusts Act 1961, iii) the Perpetuities and Accumulations Act 1968, iv) the Recognition of Trusts Act 1988, v) the Trusts Act 1995, vi) the Purpose Trust Act 1996 and vii) The Trustee Act 2001. An Isle of Man trust that excludes Isle of Man resident beneficiaries will not be taxed in the Isle of Man
Who are the Parties to a Trust?
The Settlor must be legally competent and have full title to the assets which are to be transferred into trust. It is important that the settlor does not exercise too much control over how the trustees exercise their powers or the trust will be regarded as invalid.
The Trustees may be individuals or a corporate entity. Professional corporate trustees have experience and knowledge of trust law and the legal duties imposed on trustees, and provide a continuity of service.
The Beneficiaries are those persons that are entitled to receive the income or capital of the trust in accordance with the wishes of the settlor, as fixed in the trust deed or as expressed in a separate "letter of wishes".
The settlor may wish to appoint a Protector to oversee the actions of the trustees. The protector's powers are stated in the trust deed and are limited to veto over certain powers of the trustees. A protector may be an individual, a committee or a company.