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Michael Rhodes Legal Services can assist you in the formation of your trust, whether this is to be UK or offshore based. For the UK domiciled person, a UK and offshore trust are treated in different ways for income tax and capital gains tax purposes, and it is essential that professional advice is taken prior to embarking on the setting up of a trust. 
These pages will explain what a trust is and the different purposes for which trusts can be used. In many ways, a UK and Offshore Trust are similar in structure; it is the taxation and confidentiality issues which differentiates them. In fact, for non-UK domiciliaries, the UK can be used as a base for an Offshore Trust.
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In basic terms a trust is a legal arrangement whereby property is transferred by one person (the Settlor) to one or more persons (the Trustees) to be held by them on agreed terms for the benefit of persons or entities (the Beneficiaries). The arrangement is normally contained in a legal document called the Trust Deed, although in its simplest form it can be verbal.
The Settlor may be one or more persons, and may be an individual or a corporate entity. He may be a Trustee of the Trust and may also be one of the Beneficiaries, although this may have adverse tax consequences in the case of UK trusts.
The Trustees may be either individuals or a corporate entity. Corporate entities whose primary object is the management of trusts and who comply with certain conditions may be known as Trust Corporations. Generally speaking, there will need to be a minimum of two trustees or a Trust Corporation.
These are the persons or other entities - corporate or most commonly charities - who will receive benefits from the Trust. They may be entitled to regular payments of income from the Trust assets, use of the trust assets during their lifetime (e.g. occupation of a house) or entitled to receive some or all of the Trust assets at some future date (e.g. when they reach the age of twenty five years). Beneficiaries may be described by name, "David White", or by reference to a class, "all my grandchildren". Depending upon the jurisdiction under which the Trust is set up, the Beneficiaries may have certain rights against the Trustees, to compel or restrain them from performing certain acts. The Trust Deed itself may also give the Beneficiaries certain rights.
There is a further class of Beneficiaries called "Discretionary Beneficiaries". These Beneficiaries are found, not surprisingly, in Discretionary Trusts, or hybrid Trusts. They have no fixed right to receipt of any benefit under the Trust and it is up to the Trustees to exercise their discretion as to when and to what extent they are to receive any benefit from the Trust. In this connection it is common to find that the Settlor will provide the Trustees with a Letter of Wishes giving guidance as to how they should exercise their discretion. A further protection is afforded to the Settlor that the Trustees will comply with his wishes by giving him the power to remove the Trustees should he so desire, or alternatively, appointing a Protector to oversee some of the Trustee's powers and duties.
A Protector is often appointed, particularly in the case of Offshore Trusts and Discretionary Trusts, to ensure that control is exercised over the way in which the Trustees use their powers and discretions. The Protector will also be appointed in the Trust Deed where his powers will be set out. Provision will typically be made in the Trust Deed for certain acts of the Trustee to require the prior approval of the Protector, such as when distributions are to be made to beneficiaries, investment of trust monies are to be carried out, and when further beneficiaries are to be added to the Trust.
