You may think of trust as a vehicle accessible only to the wealthy, but that is not the whole truth.A trust is a well-established concept in common law having its origins in England.Trust law is the dual ownership created by having the legal title of an asset vested in one person, while the beneficial ownership of the asset vested in another, allowing for the beneficiary to effectively divest himself/herself of direct or indirect ownership of those assets.
A trust is a very useful vehicle that can be established to provide for the needs of dependents (minor children, children with special requirements or surviving spouse) that may not be good at handling property, money or assets in general.
A trust can also be used for the following purposes:-
- tax planning;
- avoidance of forced inheritance rules;
- business Planning and succession;
- preservation and management of family wealth and protection against risks;
- for charitable purposes; and
- also for privacy purposes.
Under Mauritian Law, trusts can only be created by an instrument in writing (trust deed), stating the trust’s objects, subjects and intentions, as well as the duties and powers of the trustees. All trusts other than a purpose trust shall be limited to period of 99 years from the date of their creation, unless if the trust is terminated earlier. However,a purpose trust, whether charitable or not may be of perpetual duration.
Why choose a Mauritian based Trust?
- Confidentiality of the trustees, beneficiaries and settlor's identities;
- Unenforceability of civil law forced heir-ship rules on transfers to the trust;
- Concept of managing and custodian trustees;
- Recognition of purpose trusts with no perpetuity rules;
- Possibility for migration of the trust;
- Possibility to appoint a protector;
- Possibility to accumulate income for any period during the duration of the trust;
- Possibility of resident trusts to benefit from the network of Double Tax Treaties;
- Exemption of non-resident beneficiaries from income tax on income from the trust; and
- Exemption of charitable trusts from tax.
*** Please note that the lists provided are not exhaustive and also that this article is meant only for introductory purposes. There will be a series of articles about specific use and types of trusts that will follow.
Additional Reading: The Trust Act 2001