Formation of Trusts
Formation of Trusts
A Cyprus International Trust in simple terms can be defined as the obligation which is placed upon a Trustee by the Settlor to manage the trust property for the benefit of the Beneficiary in accordance with the trust instrument.
Trust assets include bank deposits, real estate, cash, jewelry and any kind of personal property. Our Law firm can assist you in the set-up of a holding company whose shares on trust aim to retain anonymity of the ultimate beneficial owner.
Trusts can be very advantageously and are commonly used in many cases such as for tax planning, asset protection and confidentiality purposes and/ or for the protection of minors’ rights, for the protection from potential creditors, to allow a family to retain ownership of property and to act as a management vehicle. Investment Trust Funds, banks, etc. manage funds for their clients through a structure of a trust and an offshore company that acts as a trustee.
A Cyprus International Trust can be created by anyone. The restrictions imposed by the International Trusts Law of 1992 to 2012 focus on the residency status of the Settlor, the Trustee and the Beneficiary are provided below:
Settlor: The Settlor should be non-Cyprus tax resident only in the year preceding the year of the creation of the trust thus, settlors could relocate to Cyprus after establishing a Cyprus International Trust.
Trustee: The Trustee or at least one of the Trustees must be resident in Cyprus for the whole duration of the Cyprus International Trust. This means that if the Settlor wants to appoint a Trustee who has his resident outside of Cyprus then he must appoint a second trustee. In this case our firm can provide such service for the Settlor.
Beneficiaries: The Beneficiary or Beneficiaries must not be resident in Cyprus during the calendar year immediately preceding the creation of the trust and that applies equally whether the beneficiary is a natural or legal person.
Type of Trusts
Trusts are divided in the following main categories:
- Express Private Trust
- Charitable Trust
- Fixed Trust
- Discretionary trust