Residency, management and control are the key elements to take advantage of tax exemption. It is therefore crucial that you establish and maintain your trust in the right manner. Contact us for guidance.
There are a variety of names to define specific types of trust. These include alimony trust, asset protection trust, revocable living trust, minor’s trust, testamentary trust, perpetual trust, dynasty trust, discretionary trust and trust for heirs, to name just a few.
There is a misconception about trust being used only by wealthy individuals. In fact, you may find that a trust is more relevant to you if you are less wealthy, as you cannot afford to lose your assets.
Why use trusts?
Trusts are powerful and useful to accomplish a tremendous number of taxation and protection goals.
How is a trust formed?
A trust is formed by having a legal document prepared and signed, this document is called a trust deed. The trust deed is a contract between the settlor (donor), who sets up the trust, and the trustee, who administers the trust for the benefit of its beneficiaries, which may be a list or class of persons. A trust can be formed while being alive or by will.
The optimum legal structures to minimise taxes with a high level of confidentiality and protection.
The most common types of offshore trusts in Mauritius
Fixed Income Trust
A trust that limits the discretionary powers of the trustee over the distribution of the trust’s assets, and where the principal beneficiary has an automatic right to
income arising from the trust assets.
The rights to benefit from the assets of the trust are then pass on to other beneficiary(ies) in the future.
A discretionary trust is formed when no decisions have been taken as to the allocation of specific income to a specific beneficiary or class of beneficiaries at
the time it is being set up.
Accordingly, the discretionary trust confers, to a certain extent and in accordance with the terms of the trust deed, discretionary powers on a qualified trustee in the selection of beneficiaries to whom the income from the trust’s assets should be distributed.
The purpose trust is created in Mauritius to fulfil a purpose or more that is not charitable and where the qualified trustee acts in the evolution of those purposes.
It is imperative for the purpose of the trust to be clearly defined to demonstrate the validity of its purpose and operation. The trust deed should reflect the intentions and requirements of the settlor and should leave no doubt for the trustee in terms of its actions and execution.
The purpose trust has no beneficiary and is not commonly established to generate regular
income. Where income is derived from a multi-layer structure, such income shall be paid or transferred to a particular person(s) or the income may be used to support another business.
The purpose trust is very useful for wealth planning as it allows for the segregation of certain risky assets. Its adaptability also offers a definite advantage in the context of complex structures entailing a high level of confidentiality and privacy.
The charitable trust is formed in Mauritius for charitable purposes only. It can be established for a purpose of empowering a group of individuals for a specific
cause, for the relief of poverty, social causes, religious purposes and other purposes
that would benefit the general public.
A charitable trust is also used by some individuals to donate a portion of their estate to a charity when they die. This is done on humanitarian grounds or for tax reasons or both.
As with other types of trusts, a charitable trust is administered by a qualified trustee.
Components of a Mauritius trust
The settlor can be an individual or a corporation and is the one who establishes the trust and vests assets under the management of the Qualified Trustee for the benefits of the trust’s beneficiaries.
A Qualified Trustee means a Management Company duly licensed and authorised by the Financial Services Commission of Mauritius to provide trustee services.
Beneficiaries are those who benefit from the assets and income of a trust. A beneficiary can be an individual or a corporation.
A protector is usually a person known to the settlor and who is appointed to oversee that the trust is properly managed for the benefits of the beneficiaries.
The assets of a trust may be tangible and/or intangible. They can be in the form of money, land, buildings, furniture, securities, boats, aircraft, company shares, etc.
An enforcer is a person (usually a professional such as a lawyer) who is not a trustee and whose duty is to enforce the trustee to administer the trust properly.
The court in Mauritius is unlikely to enforce a foreign judgement against a trust established in Mauritius regarding forced heirship or marital disputes.