Essentially, a Trust is a legal arrangement, embodied in a document - a TRUST DEED - whereby a person - the SETTLOR - conveys property to another person - the TRUSTEE - who will hold this property for the benefit of other named persons - the BENEFICIARIES. Trusts have been in use for centuries and are, increasingly, being used in offshore jurisdictions like Antigua and Barbuda.

The primary attraction of offshore Trusts is that they facilitate tax and inheritance planning; protect hard-earned assets; provide security against exchange controls, and ensure confidentiality.

When a Trust Deed is drawn up, it not only stipulates how the Settlor's property is to be distributed to the Beneficiaries by the Trustee but it also ensures that the legal interest in the property is held by the designated Trustee and not by the Settlor. In these circumstances, the Trustee becomes fully responsible for administering the Trust and the Settlor is no longer legally entitled to the property and, therefore, liable to taxation on it.

In some instances, and to provide an added safeguard, a Settlor can appoint a PROTECTOR.

This Protector would then be required to give his approval prior to a Trustee carrying out certain designated activities.

Trusts can be used in a number of different circumstances. We have set out below some of the more popular uses:

   Estate Planning:

A Trust can be set up to provide for a spouse during his/her lifetime; for the education of minor children and to provide for the financial needs of dependant's, either before, or after, a Settlor's death.

   Asset Protection:

A Settlor's assets can be vested in a Trust and a Trustee can administer these prior to, and after, the Settlor's death. This way, on the Settlor's death, administration of the Estate can continue uninterrupted and the likelihood of the assets going to waste during a lull in the administration is minimised.

   International Financial Planning:

A Settlor can establish a Trust in a jurisdiction (like Antigua and Barbuda) where there is political and economic stability and absence of exchange controls. The Trustee would then have control over the assets, which can be located in another jurisdiction.

   Tax Avoidance (or reduction):

By establishing a Trust, death duties and inheritance taxes can be significantly reduced or eliminated altogether. This is dependent, to a great extent, on the offshore jurisdiction that is chosen for establishing the Trust. In Antigua and Barbuda, there are no death duties or inheritance taxes.

To make good use of a Trust, a prospective Settlor should take expert advice and ensure that the Trust Deed is correctly drawn up. A Settlor can, if circumstances warrant it, use LETTERS OF WISHES (a non-binding indication to the Trustee of his wishes) to ensure that the Trust is being effectively administered.

The International Business Corporations Act facilitates the establishment of Trust Corporations that can act as Trustees. Like a basic IBC, such a Trust corporation will normally be exempt from the payment of taxes on income, interest, profits or dividends.