Trust legislation in Gibraltar is based on the relevant United Kingdom legislation. The main regulatory instrument is the law of proxy, as well as several additional decrees, such as the decree on the legal validity of the trust, investments, and duration of trust and several others.
Bankruptcy law provides a convenient way to protect their assets in case of bankruptcy of a natural person, taking into account his ability to pay at the time of the signing agreement on the establishment of a trust.
Documents of trust creation must be prepared in English, and no registration is required, but for the laws on property rights to be taken into account, registration documents must be registered in the land register. Standard Trust duration is a hundred years, without limitation of property accumulation. A trust set up by non-residents of Gibraltar, trustee is not a citizen of the state, do not pay any taxes.
Trust in Gibraltar has a number of advantages, such as a complete privacy, especially if there is no tax payment necessity, and significant tax advantages in other cases. The trustee may be resident, in the case of the absence of tax payments. Trust assets may be in any currency and the requirements for reporting and registration does not exist (except for property cases)
Trust structure is composed of the founders of the trust who transfers his assets to a trust, beneficiaries benefiting from the trust operations, trustee- can be both manager and an individual person (in this case generally two trustees are appointed) and consultants. The last ones are required to control managers because Gibraltar law gives trustees very wide powers, including the determination of additional beneficiary.
Gibraltar widely uses so-called discretionary trusts. This trust means that the founder draw up a special letter-memorandum in which he express his wishes with regard to income and capital shares. Although the trustee cannot legally fulfill what is written, in reality almost always he follows these requests. This document can be edit during the founder’s lifetime.
This type of trust benefits lies in the fact that the founders’ property comes into the trust assets is no longer his own. Thus, the founder does not pay taxes on income and capital gains, and inheritance taxes, and in the case of the proper formatting – tax deductions at all. Capital is protected from creditors, in accordance with the appropriate compliance with the procedures. There is a safe mechanism to monitor the manager’s operations and assets and the distribution of income eligibility.
One of the variants using discrete trust in Gibraltar is a property trust. Creation of this type of trust means the complete asset protection from any future claims of creditors in case of founders’ bankruptcy.
An important feature of this version is the option to create an irrevocable trust with assets located in an offshore jurisdiction. At the same time, the trust manager must ne in the offshore, and the founder is not entitled to the distribution of assets.
It should be remembered that any person who has invested the assets in the trust, founder of which has claimed insolvency, can be prosecuted.