A trust involves the transfer of legal ownership from one party, the settlor, to a second party, the trustee. The trustee holds the legal title of the trust property for the benefit of another, called the beneficiary. The trustee has a fiduciary responsibility to preserve the property. This relationship allows the trust to be treated as a separate legal entity for tax purposes and to hold property at 'arm's length' from creditors.
Trusts have many uses:
- Asset Protection. To separate the entitlement to income from property from the property itself.
- Estate planning. Upon a death or divorce, division of property can be determined by the trust deed (and therefore the wishes of the settlor) and not by the matrimonial and succession rules of the settlor's jurisdiction.
- Confidentiality. Beneficiaries are defined only in the deed, which is not a public record. Beneficiaries may not be aware of the trust until there is a distribution.
Varsity Strategic Management works with various legal and tax advisors to develop the most appropriate plan for our clients. VSM does not act as trustee but instead helps clients to choose a trustee that best suits their requirements in terms of the appropriate jurisdiction and financial institution. By working in this manner the client gains several advantages:
- a truly independent trustee
- an independent investment policy developed by VSM
- investment management that is in the best interests of the beneficiaries of the trust