Formation and use of Trust

Formation and use of Trust

Our firm holds extensive expertise on the creation of a wide spectrum of trust structures from very simple bare trusts to more complicated discretionary trusts or “shareholding trusts”

International Trust

The main Trust law of Cyprus enacted In 1955 is based on the English Trustee Act 1925 and on the doctrines of equity and case law of England. In order to strengthen the infrastructure of Cyprus as a truly international financial centre, the Cyprus Authorities have introduced through new legislation - Law 69(1) I 1992 - the concept of the Cyprus International Trust

The creation of a trust can:

  • mitigate tax liabilities, or help in the avoidance of tax;
  • preserve confidentiality;
  • allow a family to retain ownership of property;
  • permit the control and enjoyment of assets to be maintained, despite giving or selling the assets to others;
  • benefit certain groups of people, for example, the mentally disabled, while control of the property is withheld from them;
  • act as a management vehicle. Investment Trust Funds, banks, etc. manage funds for their clients through a structure of a trust and an offshore company that acts as a trustee;

For a trust to qualify as an international trust, the following requirements must be fulfilled:

  1. the settlor must not be a permanent resident of Cyprus;
  2. no beneficiary, other than charitable institution, can be a permanent resident of   Cyprus;
  3. the trust property cannot include any immovable property in Cyprus;
  4. at least one trustee must be a permanent resident in Cyprus.

Cyprus International Companies do qualify as residents of Cyprus for the purpose of the Law.

Types Of Trusts

Trusts are divided in the following main categories:

  • Private Trusts
  • Express Private Trust
  • Resulting Trust
  • Constructive Trust
  • Implied Trust
  • Charitable Trust
  • Fixed Trust
  • Discretionary trust
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