Trusts are often used by those wishing to protect and maximise their assets, simplify the management of their assets and overall estate, protect the beneficiaries’ interests, and manage their tax affairs efficiently. Contrary to popular belief, you don’t have to be super-wealthy to set up a trust, though if you have a considerable amount of assets, it is often a good idea to consolidate them and have it managed by a single, reputable Isle of Man trust company.

Setting up an Isle of Man trust is a smart financial strategy to ensure your wealth is preserved and passed on in the way that you wish it to be – with any stipulations taken into consideration.

The Trusts Act 1995 governs all Isle of Man trusts and all matters relating to it are determined by local laws. Setting up a Trust requires professional guidance as it is not a straightforward process and can become overwhelming if it’s not something you have set up before.

What is the purpose of a Trust?

The main purpose of a trust is to legally transfer assets – such as property, cars and investments – from one person to another.

When it’s set up properly, a trust can help save time and paperwork when settling an estate.

Some of the most common reasons to set up a trust as an alternative to a will include:

• Supporting someone who has a mental illness or who can’t manage their own money
• Protecting your wealth against potential divorce or bankruptcy
• Specifying and tailoring exactly who benefits from your assets
• To protect assets for future generations

4 benefits of an Isle of Man Trust

1. Avoiding probate

One of the major benefits for setting up a trust is that, in many situations, you can avoid probate. Probate (administering a deceased person’s will or estate) can take several months, potentially putting a financial strain on your beneficiaries. When you set up a trust, you can usually avoid having your assets go through probate when you die.

2. Tax benefits

Isle of Man Trusts do not pay capital gains tax, inheritance, gift or estate taxes and there is no restriction on the accumulation of income. We would recommend seeking tax advice before setting up your trust.

3. Privacy

When you typically go through probate, the information is provided for public records. However, this is not the case for trusts and so they can offer privacy and confidentiality to protect trust owners who don’t wish to make their financial affairs public knowledge.  Private trusts formed in the Isle of Man are not required to have accounts audited or to file accounts with any public body.

4. Control

Unlike with a will, the trustees of your trust control the trust assets in accordance with the terms of the trust instrument.  This includes how the assets are managed and under what circumstances they are distributed to family members. By setting up a trust, the control over who receives distributions and when can be expressed in the trust instrument. This can be important when there are surviving spouses and families with children from multiple marriages to take into consideration.

Setting up an Isle of Man Trust

While you can legally set up a trust yourself, it’s recommended to seek professional guidance as trusts can easily become liable to challenge. For peace of mind that your wealth is safeguarded for future generations, it is always worth speaking with a lawyer or CSP.

We have successfully cultivated a reputation for providing professional Trust services to our clients and their global advisers. Our Isle of Man trust services include: establishing trusts, provision of professional trustees, trust administration, accounting and bookkeeping, and banking arrangements and cash management.

Acclaim Limited also provides trust services for other jurisdictions.