chapter  17
10 Pages

Alternatives to the Offshore Trust: The Foundation

The twenty-fi rst century has ushered in an ever increasing demand for structures which provide legal mechanisms for the protection of wealth. While in the past, the preferred vehicle for protection of wealth has been the asset protection trust, more recently, diffi culties have been encountered in the use of offshore trusts. As evidenced in Abdel Rahman 1 and similar cases which raise issues of settlor control, the fundamental requirement that the trustee take full legal ownership and control of the assets is a diffi cult concession for most settlors. Business people who have built up assets by maintaining control over investment decisions are pained by the idea that, by setting up a trust, control of assets will be lost to a stranger in a remote jurisdiction where decisions are taken independent of the ‘real owner’. Devices such as letters of wishes, trustees’ fi le notes and special functions of the protector are increasingly attacked by the tax authorities of the G8 countries as being nothing more than an extension of settlor control. As a result of the increase in trust litigation, offshore trust providers have become increasingly sensitised to the potential risks, especially in jurisdictions where substantial insurance is required.