International Trust Fund Formation in Cyprus: Guaranteeing a prosperous future for your children & loved ones.
In the recent years, international trust fund formation has become extensively popular amongst people seeking to secure their wealth and ensure it is transferred safely to future generations. When looking to secure the financial future of your loved ones, creating a trust fund is a considerably reliable tool.
What Is a Trust Fund?
Simply put, a trust fund is legal entity that holds your property or other assets on your behalf. These assets are often property, but they can contain stocks, bonds, family business, money or a combination of different assets. A third, neutral party will be designated as the trustee of the fund, which means they will be tasked with managing the assets.
Trust funds include three key figures: a grantor, a beneficiary, and a trustee. The grantor of the trust funds sets the conditions on which fund will be managed and distributed, while the trustee ensures these conditions are fulfilled and handles the fund accordingly. Finally, the beneficiary is the party that receives the assets secured in the trust fund.
What makes trust funds beneficial to High-Net Worth Individuals is the fact that they offer more control than a will does, as well as more specificity. Unfortunately, wills become public recorded when the grantor passes away, but trusts remain private, so its contents and conditions are only known by the parties directly involved with it.
Trusts funds and Cyprus
Cyprus’ legislation related to trust funds is based heavily on U.K common law and has been amended in 2012 to comply to International Trust Law. International Trusts Law allows individuals and organizations to create trusts with several benefits, such as:
Hard/Impossible to void: Unlike a will, a trust is difficult to void, as it would require significant court involvement.
Security: Trusts protect assets against unexpected risks, such as government intervention or claims from current/former spouses. This means that the beneficiary is more likely to safely receive the assets and not need to battle for them in court.
Confidentiality: Any information related to the trust is kept strictly private and can only be disclosed if there is a court order to do so.
Tax benefits: This is a key point when settling a trust fund in Cyprus, since Cyprus has a highly beneficial tax system. For example, all foreign income, capital gains and profits are not taxed in Cyprus. Nor are dividends, interests, royalties, and inheritance.
Duration: International trusts have a long shelf life, meaning they can be established for the duration of the grantor’s lifetime.
Reservation of powers: Those involved in the trust funds management, a.k.a. the settlers, have the right to modify the terms of the trust. This allows certain freedoms when managing the trust.
There are certain specific advantages when registering an international trust fund in Cyprus. For example, the procedure is extremely straightforward and simple. There are narrow requirements for participants and a very clear legal framework for those interested to participate in the scheme. Emerald Group will happily provide you the full details related to the Cyprus trust structure, as well trust fund taxation and the full range of fiduciary services we offer in relation to the trust fund.
How to set up a trust a fund in Cyprus
A trust fund is set up by creating a trust deed between the grantor and the trustee and is essentially a document that contains all the terms of the trust fund. The grantor is responsible for creating these terms and decides how their assets will be handled and when they will be distributed. The trustee must then ensure that these terms are fulfilled accordingly.
The trustee is a key component in the composition of the trust fund, since the responsibility lies with them to ensure the grantor’s instructions are executed accordingly and in full compliance with the trust agreement. This is why trustee services are normally provided by law firms or accredited fiduciary companies. Trustees must act in good faith at all times and are held accountable for how the trust fund is handled; in case the conditions outlined in trust deed are not fulfilled accordingly, the beneficiary can take legal action against the trustee.
In order to create a valid trust in Cyprus, some specific requirements must be fulfilled, these are also known as certainties – the trust deed must be outlined to express the intention to create a trust fund which signifies the certainty of intention of the grantor. The assets and the beneficiaries must also be easily identifiable and ascertained. It is also crucial that the trust is a resident of Cyprus, or a Cyprus-registered company.
There are numerous advantages for foreigners when registering their fund in Cyprus, but without qualified and experienced consultants, this might be harder than need be. At Emerald Group we provide solutions for our clients interested in registering a trust fund. Emerald Group of Companies is a Licensed Fiduciary Corporate Services Provider, E953/F/2017 and has complete legal capacity, professional experience and competence to offer such services in Cyprus. When creating a trust fund for you, our range of services would include:
· Preparing all the necessary documentation for a bespoke, personalized trust deed
· Registering the trust and opening a bank account for it.
· Offering trusteeship services that include efficient management of the trust based on the grantor’s requests.
· Maintaining income records, gathering and distributing interest and dividend income
· Managing the trust in accordance with local tax regulations, ensuring that tax returns are filled correctly.
· Offering full confidentiality in handling the fund, and sensitivity to the needs of the beneficiaries in a professional manner.
Our team of experts will happily share further details with you on establishing your trust fund in Cyprus.
Our goal: To provide our clients a full range of trust fund formation services and help them secure the financial future of their families.
Disclaimer: The content of this article is valid as per information and laws valid on 27 November 2020 and is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.