Bare Trust

A bare trust exists where assets are held in the name of a Trustee who has no active duties to perform by way of management. This class of trust is analogous to a nominee situation. Typically, shares of a trading entity are so held for reasons of privacy.

The Discretionary Trust

Easily the most frequently employed, the Discretionary trust gives the Trustee wide powers of investment and distribution. It is left to the Trustee (who may be guided by a non-binding Letter of Wishes from the Settler) to determine when and to which of the beneficiaries capital and/or income of the trust will be distributed, and in what proportions. Again, the Settlor can appoint as his "watchdog" a Protector to exercise appropriate control mechanisms.

The Fixed Interest Trust

This is particularly useful in the context of the planning of estates. Avoiding the cost, complexity, Government disclosures and loss of confidentiality associated with the Probate process, it deals with the orderly disposition of the settlor's estate, according to what we might call a family business plan. It may provide for the redistribution of trust income to principal beneficiaries, to be followed, according to a predetermined plan, by the distribution of the trust assets to designated beneficiaries at stipulated times.

The Purpose Trust

Bermuda has legislated to enable an enforceable trust to be established to carry out a particular purpose rather than to benefit a particular person. Cedar has specialised in both simple and advanced development of commercial and corporate strategies involving the use of the purpose trust. For example a purpose trust may advance a political cause, may have the purpose of carrying out specialised functions and providing appropriate services for specific personal or corporate strategies.

The Charitable Trust

This is a trust established to benefit a "charity" as legally defined. International charities are domiciled in Bermuda for security, cost-savings and ease of administration.

Life Insurance Trusts

Here tax effective products may be held in a protected "cocoon" trust with some asset protection features. Proceeds provide liquidity at death of the life assured. Thus funds become available for payment of Death Duties, to assist staff to buy out a family business, to enable a surviving spouse to adjust his/her lifestyle and for many other purposes calling for liquidity.

Trading Trusts

Both "private" and "public" trading trusts offer interesting planning opportunities

Testamentary Trusts

The employment of the International Will or Wills and trusts created thereunder should be considered in any Estate Plan involving assets in more than one jurisdiction.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought for your specific circumstances.