Services

Trusts, Foundations and
Estate Planning

OTC is highly experienced in counseling individuals and families regarding the protection, preservation and accretion of assets through compliant trust structures.

We work closely with family offices in estate planning, employing various strategies in addition to trust structures for the purpose of transferring family wealth to the next generation in the most efficient, and tax-beneficial manner, with strong sensitivity to the importance of intra-family personal relationships.

We create and implement trust, foundation and corporate structures, by drafting and executing all required documentation with careful regard for all relevant laws and regulations, or by carrying out diligently instructions of other professionals.

OTC acts as a trustee in family trusts in various jurisdictions, working closely with money managers and banks throughout Europe, North America and Israel.

OTC acts as a trustee in the management of “trading trusts” for commercial purposes, using VISTA, STAR regimes and others.

What is a Trust / Foundation?

Under English Common Law, and in virtually all other jurisdictions, which are not Common Law but have adopted the concept of trust, a trust is a legal relationship or an “arrangement”, created – by deed or by will upon death – by a person known as the settlor (foundation: founder), who places assets under the control of a trustee (foundation: council) for the benefit of a beneficiary, or for a specified purpose.

The main characteristics of a trust are:

  • Segregated assets (trust fund).
  • Legal title in name of trustee.
  • Trustee has power and accountable duty to manage/employ/dispose of assets as per terms of trust and applicable law.

Thus, the trustee administers the trust assets and is responsible for dealing with third parties. The various rights, obligations and powers are set out in a formal trust deed, or in a will. The deed, unlike a will, in most cases, is in principle a private document and is not subject to public disclosure other than by order of the Courts or competent authorities. The deed will specify what law governs the trust and what Courts will be competent to adjudicate in all matters concerning the trust.

In principle, the settlor decides – in the deed or will – what interest the beneficiaries should have. The settlor may also reserve himself certain powers. The trust deed or the will, therefore, can be as simple or complex as the settlor requires or as the circumstances demand.
The deed or will must specify clearly what property is to be included in the “Trust Fund” of the trust. Typically, the documents permit further contributions to the Trust Fund after the trust is created.

The separation of the legal ownership and beneficial ownership of the assets and the Trust Fund is the unique characteristic of the trust concept. Trustees are the legal owners but the beneficiaries are the beneficial owners, and the trustees owe duties to the beneficiaries, in particular a duty of loyalty and a duty to put the beneficiaries’ interests first, above their own.

Normally, the trustee has wide discretion in the management of the Trust Fund and in dealing with the beneficiaries, subject to the terms of the deed or will, and to any provisions of the relevant law.

It is most common for the settlor to appoint a Protector, the settlor’s confidant, who is usually entitled to remove the trustee and appoint others, and whose consent or initiative is required for certain acts of the Trustee – a “watchdog”.

Foundations generally achieve the same purposes as trusts. The main difference is that a foundation, unlike a trust, is a legal entity, like a company. As such, it requires registration in one of the particular jurisdictions which provide for the formation of foundations, and its formation statutes are open to the public. Nevertheless the founder or council of the foundation may adopt by-laws which are not a public document. Typically, such by-laws will contain detailed provisions regarding the beneficiary and the management of the foundation.

The Historical Perspective and Uses of Trusts

The trust concept has a long and interesting history. The following summary also helps understand the concept and uses of trusts in such historical terms:

In biblical times someone going on a trip could have asked a fellow tribesman to watch his cattle and chickens, with permission to keep the milk and eggs as compensation. There was no transfer of title to the livestock, only a temporary transfer of possessions with a limited right to the proceeds but no right of sale. Although the person who assumed possession was entrusted with the property of another, and was expected to safeguard it, it was not “his.” If there was a tax to be paid, the owner who was on the trip was liable for the tax on his return. If the owner died on the trip, his heirs and not the heirs of the person in possession would inherit the animals.

By the Middle Ages, property rights, taxes and succession became more complex. Especially in Europe, land became as, or more, important than livestock or other moveable property as a resource of wealth. in addition, during that time, generally speaking, taxes rose.

To mitigate taxes, large landowners in the Middle Ages began to transfer their property in trust to the Church, which was tax except. The arrangement was that, to avoid the Crown’s taxes, title to the land passed to the Church, which became the legal owner of the land. However, the Church agreed to hold the land for the benefit of the landowner and his heirs – the beneficiaries. The Church was entitled to a portion of the proceeds from the crops or cattle on the land, but that was less than the avoided taxes. The key to this avoidance of tax was a change in ownership, or a separation of legal ownership and beneficial ownership. The Church had to have title to avoid the tax. The tax collectors would not accept some vague statement that, while title remained with the landowner, in some way it was no longer “his” and therefore not subject to tax.

An additional use of this arrangement arose during the Crusades. Those landed gentry off to liberate the Holy Land recognized the risk of them not returning and did not want their land to escheat to the Crown in that unfortunate event. Hence, the same arrangement-transfer of title to the Church, with the nobleman and his family retaining beneficial ownership. Here again, title had to vest away from the crusader to avoid escheat. These two original uses of trusts – tax mitigation and the circumvention of succession laws (e.g. where forced heirship laws are in force) – are, together with asset protection, the motivation for the vast majority of trusts formed today.

Trusts can be used for a variety of other reasons as well. Some may be formed to establish a permanent charity or for a permanent land trust or to establish a family dynasty. Some may be used to care for disabled persons, or wasteful descendants. Trusts may also serve as a “living will” in those jurisdictions where this legal institution is not accepted or a power of attorney expires upon the grantor becoming incapacitated.

Services

Trusts, Foundations and
Estate Planning

OTC is highly experienced in counseling individuals and families regarding the protection, preservation and accretion of assets through compliant trust structures.

We work closely with family offices in estate planning, employing various strategies in addition to trust structures for the purpose of transferring family wealth to the next generation in the most efficient, and tax-beneficial manner, with strong sensitivity to the importance of intra-family personal relationships.

We create and implement trust, foundation and corporate structures, by drafting and executing all required documentation with careful regard for all relevant laws and regulations, or by carrying out diligently instructions of other professionals.

OTC acts as a trustee in family trusts in various jurisdictions, working closely with money managers and banks throughout Europe, North America and Israel.

OTC acts as a trustee in the management of “trading trusts” for commercial purposes, using VISTA, STAR regimes and others.

What is a Trust / Foundation?

Under English Common Law, and in virtually all other jurisdictions, which are not Common Law but have adopted the concept of trust, a trust is a legal relationship or an “arrangement”, created – by deed or by will upon death – by a person known as the settlor (foundation: founder), who places assets under the control of a trustee (foundation: council) for the benefit of a beneficiary, or for a specified purpose.

The main characteristics of a trust are:

  • Segregated assets (trust fund).
  • Legal title in name of trustee.
  • Trustee has power and accountable duty to manage/employ/dispose of assets as per terms of trust and applicable law.

Thus, the trustee administers the trust assets and is responsible for dealing with third parties. The various rights, obligations and powers are set out in a formal trust deed, or in a will. The deed, unlike a will, in most cases, is in principle a private document and is not subject to public disclosure other than by order of the Courts or competent authorities. The deed will specify what law governs the trust and what Courts will be competent to adjudicate in all matters concerning the trust.

In principle, the settlor decides – in the deed or will – what interest the beneficiaries should have. The settlor may also reserve himself certain powers. The trust deed or the will, therefore, can be as simple or complex as the settlor requires or as the circumstances demand.
The deed or will must specify clearly what property is to be included in the “Trust Fund” of the trust. Typically, the documents permit further contributions to the Trust Fund after the trust is created.

The separation of the legal ownership and beneficial ownership of the assets and the Trust Fund is the unique characteristic of the trust concept. Trustees are the legal owners but the beneficiaries are the beneficial owners, and the trustees owe duties to the beneficiaries, in particular a duty of loyalty and a duty to put the beneficiaries’ interests first, above their own.

Normally, the trustee has wide discretion in the management of the Trust Fund and in dealing with the beneficiaries, subject to the terms of the deed or will, and to any provisions of the relevant law.

It is most common for the settlor to appoint a Protector, the settlor’s confidant, who is usually entitled to remove the trustee and appoint others, and whose consent or initiative is required for certain acts of the Trustee – a “watchdog”.

Foundations generally achieve the same purposes as trusts. The main difference is that a foundation, unlike a trust, is a legal entity, like a company. As such, it requires registration in one of the particular jurisdictions which provide for the formation of foundations, and its formation statutes are open to the public. Nevertheless the founder or council of the foundation may adopt by-laws which are not a public document. Typically, such by-laws will contain detailed provisions regarding the beneficiary and the management of the foundation.

The Historical Perspective and Uses of Trusts

The trust concept has a long and interesting history. The following summary also helps understand the concept and uses of trusts in such historical terms:

In biblical times someone going on a trip could have asked a fellow tribesman to watch his cattle and chickens, with permission to keep the milk and eggs as compensation. There was no transfer of title to the livestock, only a temporary transfer of possessions with a limited right to the proceeds but no right of sale. Although the person who assumed possession was entrusted with the property of another, and was expected to safeguard it, it was not “his.” If there was a tax to be paid, the owner who was on the trip was liable for the tax on his return. If the owner died on the trip, his heirs and not the heirs of the person in possession would inherit the animals.

By the Middle Ages, property rights, taxes and succession became more complex. Especially in Europe, land became as, or more, important than livestock or other moveable property as a resource of wealth. in addition, during that time, generally speaking, taxes rose.

To mitigate taxes, large landowners in the Middle Ages began to transfer their property in trust to the Church, which was tax except. The arrangement was that, to avoid the Crown’s taxes, title to the land passed to the Church, which became the legal owner of the land. However, the Church agreed to hold the land for the benefit of the landowner and his heirs – the beneficiaries. The Church was entitled to a portion of the proceeds from the crops or cattle on the land, but that was less than the avoided taxes. The key to this avoidance of tax was a change in ownership, or a separation of legal ownership and beneficial ownership. The Church had to have title to avoid the tax. The tax collectors would not accept some vague statement that, while title remained with the landowner, in some way it was no longer “his” and therefore not subject to tax.

An additional use of this arrangement arose during the Crusades. Those landed gentry off to liberate the Holy Land recognized the risk of them not returning and did not want their land to escheat to the Crown in that unfortunate event. Hence, the same arrangement-transfer of title to the Church, with the nobleman and his family retaining beneficial ownership. Here again, title had to vest away from the crusader to avoid escheat. These two original uses of trusts – tax mitigation and the circumvention of succession laws (e.g. where forced heirship laws are in force) – are, together with asset protection, the motivation for the vast majority of trusts formed today.

Trusts can be used for a variety of other reasons as well. Some may be formed to establish a permanent charity or for a permanent land trust or to establish a family dynasty. Some may be used to care for disabled persons, or wasteful descendants. Trusts may also serve as a “living will” in those jurisdictions where this legal institution is not accepted or a power of attorney expires upon the grantor becoming incapacitated.

OTC is highly experienced in counseling individuals and families regarding the protection, preservation and accretion of assets through compliant trust structures.

We work closely with family offices in estate planning, employing various strategies in addition to trust structures for the purpose of transferring family wealth to the next generation in the most efficient, and tax-beneficial manner, with strong sensitivity to the importance of intra-family personal relationships.

We create and implement trust, foundation and corporate structures, by drafting and executing all required documentation with careful regard for all relevant laws and regulations, or by carrying out diligently instructions of other professionals.

OTC acts as a trustee in family trusts in various jurisdictions, working closely with money managers and banks throughout Europe, North America and Israel.

OTC acts as a trustee in the management of “trading trusts” for commercial purposes, using VISTA, STAR regimes and others.

What is a Trust / Foundation?

Under English Common Law, and in virtually all other jurisdictions, which are not Common Law but have adopted the concept of trust, a trust is a legal relationship or an “arrangement”, created – by deed or by will upon death – by a person known as the settlor (foundation: founder), who places assets under the control of a trustee (foundation: council) for the benefit of a beneficiary, or for a specified purpose.

The main characteristics of a trust are:

  • Segregated assets (trust fund).
  • Legal title in name of trustee.
  • Trustee has power and accountable duty to manage/employ/dispose of assets as per terms of trust and applicable law.

Thus, the trustee administers the trust assets and is responsible for dealing with third parties. The various rights, obligations and powers are set out in a formal trust deed, or in a will. The deed, unlike a will, in most cases, is in principle a private document and is not subject to public disclosure other than by order of the Courts or competent authorities. The deed will specify what law governs the trust and what Courts will be competent to adjudicate in all matters concerning the trust.

In principle, the settlor decides – in the deed or will – what interest the beneficiaries should have. The settlor may also reserve himself certain powers. The trust deed or the will, therefore, can be as simple or complex as the settlor requires or as the circumstances demand.
The deed or will must specify clearly what property is to be included in the “Trust Fund” of the trust. Typically, the documents permit further contributions to the Trust Fund after the trust is created.

The separation of the legal ownership and beneficial ownership of the assets and the Trust Fund is the unique characteristic of the trust concept. Trustees are the legal owners but the beneficiaries are the beneficial owners, and the trustees owe duties to the beneficiaries, in particular a duty of loyalty and a duty to put the beneficiaries’ interests first, above their own.

Normally, the trustee has wide discretion in the management of the Trust Fund and in dealing with the beneficiaries, subject to the terms of the deed or will, and to any provisions of the relevant law.

It is most common for the settlor to appoint a Protector, the settlor’s confidant, who is usually entitled to remove the trustee and appoint others, and whose consent or initiative is required for certain acts of the Trustee – a “watchdog”.

Foundations generally achieve the same purposes as trusts. The main difference is that a foundation, unlike a trust, is a legal entity, like a company. As such, it requires registration in one of the particular jurisdictions which provide for the formation of foundations, and its formation statutes are open to the public. Nevertheless the founder or council of the foundation may adopt by-laws which are not a public document. Typically, such by-laws will contain detailed provisions regarding the beneficiary and the management of the foundation.

The Historical Perspective and Uses of Trusts

The trust concept has a long and interesting history. The following summary also helps understand the concept and uses of trusts in such historical terms:

In biblical times someone going on a trip could have asked a fellow tribesman to watch his cattle and chickens, with permission to keep the milk and eggs as compensation. There was no transfer of title to the livestock, only a temporary transfer of possessions with a limited right to the proceeds but no right of sale. Although the person who assumed possession was entrusted with the property of another, and was expected to safeguard it, it was not “his.” If there was a tax to be paid, the owner who was on the trip was liable for the tax on his return. If the owner died on the trip, his heirs and not the heirs of the person in possession would inherit the animals.

By the Middle Ages, property rights, taxes and succession became more complex. Especially in Europe, land became as, or more, important than livestock or other moveable property as a resource of wealth. in addition, during that time, generally speaking, taxes rose.

To mitigate taxes, large landowners in the Middle Ages began to transfer their property in trust to the Church, which was tax except. The arrangement was that, to avoid the Crown’s taxes, title to the land passed to the Church, which became the legal owner of the land. However, the Church agreed to hold the land for the benefit of the landowner and his heirs – the beneficiaries. The Church was entitled to a portion of the proceeds from the crops or cattle on the land, but that was less than the avoided taxes. The key to this avoidance of tax was a change in ownership, or a separation of legal ownership and beneficial ownership. The Church had to have title to avoid the tax. The tax collectors would not accept some vague statement that, while title remained with the landowner, in some way it was no longer “his” and therefore not subject to tax.

An additional use of this arrangement arose during the Crusades. Those landed gentry off to liberate the Holy Land recognized the risk of them not returning and did not want their land to escheat to the Crown in that unfortunate event. Hence, the same arrangement-transfer of title to the Church, with the nobleman and his family retaining beneficial ownership. Here again, title had to vest away from the crusader to avoid escheat. These two original uses of trusts – tax mitigation and the circumvention of succession laws (e.g. where forced heirship laws are in force) – are, together with asset protection, the motivation for the vast majority of trusts formed today.

Trusts can be used for a variety of other reasons as well. Some may be formed to establish a permanent charity or for a permanent land trust or to establish a family dynasty. Some may be used to care for disabled persons, or wasteful descendants. Trusts may also serve as a “living will” in those jurisdictions where this legal institution is not accepted or a power of attorney expires upon the grantor becoming incapacitated.