Services · Trusts & private foundations

What a trust is

Updated 5 October 2026

We explain how a trust works, who it suits and what it does not do. We choose the jurisdiction and trustee and draft the trust deed.

A trust is a relationship from English law: the settlor transfers assets to a trustee, who holds and manages them for the beneficiaries under the trust deed. The trustee becomes the legal owner but may not use the assets for their own benefit. A trust is not a legal person: it has no charter or board, only a deed and parties.

Below, in plain terms: who takes part in a trust, the main types, why trusts are created, what a trust does not do and how to set one up.

Who takes part in a trust

• The settlor transfers assets into the trust and sets the rules in the deed. Some laws let the settlor reserve powers: for example, the Jersey trusts law allows keeping the right to revoke or vary the trust and to give investment directions.
• The trustee holds the assets, keeps records and makes distributions. Usually this is a licensed trust company: in Malta professional trustees need authorisation from the Malta Financial Services Authority, in Switzerland a licence from the financial market supervisor.
• Beneficiaries receive distributions under the deed: children, a spouse, other relatives or charitable purposes.
• A protector, if the settlor wishes, oversees the trustee: consents to major decisions and can replace the trustee.

Types of trusts

• Discretionary. The trustee decides who receives what, within the deed and the settlor's letter of wishes.
• Fixed interest. The deed sets out in advance who receives which share.
• Revocable and irrevocable. In a revocable trust the settlor can take the assets back; in an irrevocable one they cannot. This often decides how the trust is taxed in the settlor's country.
• Purpose trust. It serves a purpose rather than people, for example holding shares in a family company.

Why trusts are created

• to pass wealth to children and grandchildren without splitting stakes or inheritance disputes;
• to separate family assets from business risk;
• to entrust management to a professional while heirs are young;
• to hold assets in several countries in one structure.

How a trust protects assets

Trust jurisdictions shield trusts from foreign law. For example, under article 14 of the Trusts (Guernsey) Law 2007, the validity of a trust, its administration and the distribution of its assets are determined by Guernsey law without reference to the law of any other country. So foreign forced heirship rules do not break such a trust. But the protection works only if the assets were transferred to the trustee well in advance, not on the eve of a dispute with creditors.

What a trust does not do

A trust does not hide the owner from the state. In the EU, trust beneficiaries are recorded in registers: in Malta the Financial Services Authority has kept one since 1 January 2018, in Cyprus the Securities and Exchange Commission. Banks and trustees check the source of funds, and tax authorities exchange account information. A trust also does not remove taxes in the countries where the settlor and beneficiaries live; we review those rules before setup.

How to choose the trust jurisdiction

The jurisdiction depends on the family's goal, the bank and taxes. Jersey and Guernsey offer trusts with no time limit and broad settlor powers, Malta and Cyprus an EU trust with supervised trustees, and Switzerland has recognised foreign trusts since 1 July 2007 and offers access to its banks. A detailed comparison is in our overview of trust jurisdictions.

How to set up a trust

1. Goal. We review the assets, beneficiaries, the control needed and the family's taxes.
2. Jurisdiction and trustee. We choose the governing law and a licensed trustee.
3. Due diligence. The trustee and bank check the settlor and the origin of the assets.
4. Deed. We draft the trust deed and letter of wishes and appoint a protector.
5. Transfer of assets. We move money and re-register assets to the trustee and file register information.

What it costs

Drafting a trust deed under British Virgin Islands law costs $10,000 with us. Setup and annual administration by the trustee are priced separately and depend on the jurisdiction, assets and number of beneficiaries. A manager will calculate the total in the chat.

Fees

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