Seychelles Trusts – how they can be used with IBC’s

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What do you think of when you hear the term “Trust”?

For most people, they conjure up the image of a “Trust fund baby” or celebrities and business tycoons looking to pass down their wealth to future generations more tax-efficiently. 

And while this is true, in reality Trusts can be used by anyone, regardless of the size of the estate. International Trusts like Seychelles International Trusts have a broad range of benefits and purposes but one of the main reasons people choose to use them is to ensure their assets are handled according to their wishes, from the moment the Trust goes into effect, until long after passing.

They are often used in combination with International Business Companies (IBC), where the trusts holds the shares of the IBC, providing an additional layer of protection and confidentiality to the beneficial owners. 

Trustees can exercise greater flexibility in dealing with changes in the needs and situations of beneficiaries and are often used to: 

Avoid Probate Process:

Winding up of an estate is lengthy and costly affair but through a Trust access can pass to beneficiaries outside the probate process. 

Secure Jumbo Life Insurances:

Trusts can be used to structure the lending from banks against future income of a jumbo life insurance

Protecting Assets:

As a parent, it is natural to protect your children even after they reach adulthood. Trusts can protect your child’s inheritance even before they get married and will ensure their assets cannot be touched in the event of divorce. It allows allows individuals to protect assets from creditors while still enjoying the benefits of the assets. 

Taxation:

Minimising taxes is one of the benefits of establishing a Trust and  in the case of an Irrevocable trust – assets transferred here are owned by the Trust so the former owner of the Trust will in a lot of jurisdictions not pay tax on the assets during their lifetimes and even upon death.

Spendthrift Protection:

Young adults may not be capable of handling large amounts of funds,  so corporate trustees can be appointed to distribute funds to beneficiaries according to use on activities/ expenses detailed in the trusts. 

Before establishing a Trust, it is important to discuss your goals with professionals who specialise in structuring trusts & estates so they can help you select one that is suited to your desired outcome.

Revocable Trust:

Created during your lifetime but can be altered or revoked while you are alive. It is most used to avoid probate but is not iron-proof while you are alive – assets will still be available to creditors during your lifetime but it will be more difficult for them to gain access to it.

Irrevocable Trusts: 

Just like the name, with this trust you won’t be able to alter or change anything once it’s established. These are used as a way to protect assets from creditors or bypass estate tax, as your ownership over the assets in the trust is removed. 

Discretionary Trust

Are the most popular form of Trusts in Seychelles in terms of tax planning purposes. Trustees can also appoint additional beneficiaries, remove existing beneficiaries and can distribute income and capital to beneficiaries in various amounts at any time. 

Each trust has specific nuances, each of which will be better or less suited to the grantor’s goals. As a boutique Corporate Service agent, we work closely with our clients to understand their desired outcome and recommend Trust structures best suited to their individual and family needs. Get in touch with us to discuss your succession planning on info@hensleycook.com 

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