PACIFIC PARTNERS LAWYERS
Trusts
Trusts come in many different forms, depending on what is required to be achieved. To begin, trusts fall into 2 main categories.
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Revocable - This can be changed anytime by the appointor.
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Irrevocable - This can only be changed by the beneficiaries.
KEY REQUIREMENTS. A Trust needs:
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A Trustee: This is the “legal owner” of the trust assets and may be a company, natural person or both.
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An Appointor or Controller: These ultimately determine who the Trustee will be and may even have power to remove a Trustee at any time. In Vanuatu the Trustee and Appointor may be the same person or company.
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Beneficiaries: These are the “equitable” or real owners of the assets of the trust. Depending on the trust type there may be one person/company/trust/charity or numerous persons etc. These may receive fixed payments or only receive a benefit as determined by the Trustee (such as a discretionary trust used in family situations). They may have “units” given to the beneficiaries. There are many other types and situations requiring careful planning.
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A Settlor: This is the person who establishes the trust and “transfers” the property to the Trustees to use as required under the trust deed.
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As different countries have different taxation laws, we recommend that a Vanuatu trust only hold assets in Vanuatu. For example, New Zealand looks to the residence of the settlor not Trustee for tax purposes, meaning there could be a massive tax bill to be paid if the settlor is a NZ tax resident. However provided that there is a NZ sourced income and distributions, there is no tax. While Australia operates under different tax laws, income derived by beneficiaries under a foreign trust may be taxable.
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BENEFITS OF TRUSTS
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Easy to set up.
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No registration is required, meaning the identity of the beneficiaries is private.
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Protects beneficiaries assets.
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Allows a Trustee in Vanuatu to “ignore” a ruling of a foreign court that assets be handed over, (subject to laws), on a jurisdictional basis.
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No audits.
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Can hold assets, buy and sell, borrow and so forth.
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May employ others to administer.
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In the case of discretionary trusts, allows for effective tax distributions.
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Beneficiaries do not need to be aware of their trust benefit.
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Trust Deed can be easily varied, amended or revoked.
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Can be set up to come into existence only at death, meaning the giver has use of the assets while alive.
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If you want to establish a trust, or get more information on how different forms of trust can help you, please contact us.
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