We have previously explained that a trust is an agreement whereby one person (the settlor) transfers the ownership of certain assets to another (the trustee) to manage them for the benefit of one or more third parties (the beneficiaries) and ultimately transfer them to these beneficiaries or others at the end of a specified period or upon the occurrence of a condition.
Today, we will share three common questions we receive about trusts, whose answers we believe may be important for you.
1. What types of trusts exist and where can they be established?
There are several types of trusts: revocable, irrevocable, discretionary, non-discretionary, among others. Their implementation depends on the client’s needs and objectives. There are also many jurisdictions where trusts can be established, mostly regulated by common law.
2. Is there any substantial difference between a trust created in the United States or in another jurisdiction, such as New Zealand, the Cayman Islands, etc.?
Yes. In addition to differences in the requirements and conditions for their creation and regulation, the most notable difference is the adherence to the Common Reporting Standard (CRS) by these latter jurisdictions, which does not apply to the United States.
Countries have made significant progress in the exchange of financial information, and taxpayers’ privacy rights have been compromised.
With the implementation of CRS, countries that have signed this automatic exchange of information agreement have begun to automatically obtain and exchange financial information about most trusts, including the identity of settlors, assets, and generated profits. Beneficiaries are generally only reported in years when they receive benefits.
3. Which jurisdictions are most commonly used by Untitled and why?
To establish these types of structures, we primarily work with North American states such as South Dakota and the United States Virgin Islands (USVI), as they have very strong asset protection legislation in addition to considerations regarding CRS compliance. Therefore, it is virtually impossible for settlors’ creditors to reach these assets.
Furthermore, their asset protection statutes specifically exclude claims for forced inheritances.
This does not mean that we have not worked or cannot work with other jurisdictions. It always depends on the case, the type of structure, and the needs of each client.
Who chooses the services of Untitled Sports & Entertainment?