Trust in Jersey
Trust in Jersey
A trust is a structure of certain liabilities based on the law of equity. The trustee manages the trust. He manages the property in favor of beneficiaries. Such a financial mechanism helps to flexibly plan all property rights, to share resources and control their transfer to third parties. Jurisdictions of many countries offer investors all opportunities to form trusts. There is one of them in Jersey.
The legislation of Jersey has a solid history of such activities and is well suited for trust creation. This island refers to the stable socio-economic area. It ensures high degree of protection of beneficiaries within its area and all aspects of the trust structure are regulated by the Finance Commission. The island itself is owned by Great Britain and the Anglo-Saxon Law with clear rules and regulations is applicable there.
Among the significant advantages of trust formation in Jersey are the following:
- flexible taxation mechanism that does not allow fee payment during the trust formation and operation and any fees for the capital increase or asset donation.
- absolute anonymity of information about founders and beneficiaries since the trust structure is not registered with state authorities of Jersey;
- vast tax planning opportunity for future business activity (there are rules on the avoidance of double taxation on the island);
- lack of rights guaranteed share in the inheritance and distribution of property only at the request of the founders;
- security deposits, and no financial control over the movement of the currency.
PRINCIPLES OF TRUST IN JERSEY
Trust in Jersey are functioning successfully asper the standard and proven scheme. The manager is always a founder who transfers assets to the particular structure. Thus, it loses its rights of ownership to assets and is no longer subject to tax obligations of their country. The founder may also, at its discretion, perform the following steps:
- to appoint beneficiaries;
- to monitor all management activities, make key decisions and set limits;
- to add new environment, make adjustments, and cancel some terms of the trust activities;
- to define the amount of deductions from income and to solve the issues on advance payments;
- to choose trustees, consultants and supervisors;
- to change the right of applicability and carry out many other actions at its discretion.
Unlimited powers of the trust owners on Jersey attracts many people who intend to become founders. They can even act as beneficiaries, but this is undesirable since the information on beneficiaries should not be disclosed.
For direct control, trustee services are used – the person who manages the property. It acts as a third party in relations and the intermediary between founder and beneficiaries. The trustee is not required to be a local island resident. But if he is a foreigner, his income may be subject to taxation of the country whose citizen he is.
An entity ay act as a trustee. And, if necessary, the trust founder may involve the guarantor and trustee to manage the structure. These people should not be among the founders despite the fact that this is not prohibited by law. If the trust founder wants to keep ultimate confidentiality, it is better to choose a third-party trustee. It is also worth noting that the information on managing structures of the trust for Jersey is not subject to disclosure.
REGISTRATION PROCESS AND TYPES OF TRUSTS
The procedure of right acquisition for the entity normally takes less than 40 days. It is quite simple and does not require registration in state authorities of the island. Thus, the trust owner creates a guaranteed confidential structure. In addition, there are no requirements for currency and minimum capital to form the trust for Jersey.
To form a trust, the owner should take the following actions:
- carefully work out and create the constituent documents specifying rules of administration and asset distribution;
- to monitor the composition of their own assets so that there is not a land plot on the island of Jersey since it is prohibited by law;
- to monitor the financial statement of the trustee.
The types of trust structures depending on demands of founders:
- Fixed trust. It specifies certain interest for beneficiaries and allows opportunities for time constraints. Such constraints may be various changing circumstances, reaching the certain age or conditions.
- Cumulative trust. It is created to ensure financial stability of descendants or family. Its duration is 100 years, and the income is regularly accumulated and increased under the influence of financial mechanisms. For cumulative, the trustee controls security of funds. He is also entitled to transfer the part of savings for contingencies, health treatment or payment conditions to beneficiaries.
- Discretionary trust. With this form of organization structure, the manager can decide on his own on amounts to be paid to beneficiaries. He is also entitled to regularly change terms depending on circumstances. All funds are allocated among beneficiaries based on written instructions from founders. The final opinion is not considered binding, and the owner has the last decision.
- Purpose trust. It is usually arranged for specific purpose different from the standard security of beneficiaries, namely, for charitable activities. It could include international finance and investments to good purposes, non-illegal and immoral nature. In case of the target trust, the founder should clearly define the urposr and to assign a comptroller.
- A trust with reserved powers. Created specifically for the owner to transfer the right of control to third parties or their founders at any time.
TAXATION ADVANTAGES IN JERSEY
There are no fees in addition to income tax on the island. If the trust owner makes profit beyond the island, and its beneficiaries are not island residents, they do not pay any taxes to the local budget. Trustee does not also pay taxes on existing assets, so they may be freely accumulated and transferred to others. But it should be noted that beneficiaries and shareholders are subject to taxation system of those countries, residents of which they are. If dividends are paid from trust assets of the local bank, they are not generally taxed.