Choosing between trust, foundation and holding company
A trust is a fiduciary relationship where the trustee administers assets for beneficiaries; a foundation is an autonomous entity with its own council; a holding remains a company with shareholders. The choice depends on the control the family wants to keep and on the assets involved.
- Discretionary trust for changing beneficiaries and privacy
- Foundation for philanthropic or very long-term purposes
- Holding and family agreements to keep control of the business
Formation, trustee and settling the assets
The trust deed sets purpose, powers and limits; the letter of wishes guides the trustee without binding him. Transfers must be valid where the assets sit: real estate, shares and cash each follow different formalities.
- Independent professional trustee and protector
- Transfer deeds, valuations and land-registry filings
- Distribution rules, duration and termination
Taxation, compliance and losing the benefits
Taxation depends on the residence of settlor, trustee and beneficiaries and on whether the structure is discretionary or transparent. Beneficial-ownership registers, CRS exchange and annual filings make orderly accounts essential.
- Opaque versus transparent trusts and income taxation
- Gift and inheritance tax on settlement and on distributions
- Beneficial-owner register, CRS and beneficiary accounts
Key takeaways
- A trust holds up only if the settlor genuinely gives up control.
- Choose the jurisdiction for the assets and beneficiaries, not just for tax.
- Annual administration — accounts, filings, registers — is part of the structure.
Frequently asked questions
- Does a trust protect against creditors?
- It protects assets settled lawfully and without simulation, before the debt arises. Transfers made to defeat existing creditors can be clawed back.
- Can I be trustee of my own trust?
- Not advisable: excessive settlor control exposes the structure to being disregarded for tax. Use a professional trustee with a protector safeguarding the family.