Gibraltar Trusts
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Gibraltar’s legal system is based on the common law and statute law of England and therefore embodies the
advantages and security of English company and trust law.
Gibraltar lawyers are well versed in trust law being UK trained and qualified. Furthermore, the trust concept is
fully recognised by the Gibraltar Supreme Court. If you are dissatisfied with the decision of the Supreme Court
in Gibraltar, you may appeal to the Gibraltar Court of Appeal which is made up of UK judges which visit
Gibraltar on a biannual basis. The final Court of Appeal is the Privy Council, effectively the House of Lords in
England.
Appointment and Regulation of Trustees
An individual or a trust corporation may be appointed as trustee.
For a trust corporation to act as a trustee, it must have a licence to operate as a professional trustee granted
by the Financial Services Commission pursuant to the Financial Services Act.
Underlying Company
It is usual for an underlying company to be utilised as a vehicle to hold assets of the trust. The company
acquires assets such as real estate, marketable securities, a pleasure yacht or other suitable investments and
it is the shares in the company that are entirely owned by the Trust.
Why Establish a Trust?
The trust is a highly flexible instrument which can be tailored to meet a Settlor’s specific requirements and
apart from confidentiality may provide the following advantages:
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Protection and administration of assets for family and future generations.
No need for probate which simplifies the distribution of assets to family members.
Minimising income and other taxes payable.
Avoiding inheritance taxes or estate duties which may otherwise be payable.
Avoiding forced heirship provisions whereby the Laws of a particular Country determine the inheritance of
assets in a manner which may be contrary to the wishes of the Settlor.
Taxation of Gibraltar Trusts
Trusts established for non-residents of Gibraltar do not pay any income tax in Gibraltar even where the trustees
are Gibraltar residents, the trust is fully managed from Gibraltar and trust assets such as bank deposits are held
in a Gibraltar bank.
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Further Tax Advantages
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There is no estate duty in Gibraltar.
No stamp duty is payable on the transfer of assets held by a trust except in the case of immovable
property situate in Gibraltar.
No gift or wealth taxes are payable.
There are no capital gains taxes in Gibraltar.
How Does a Trust Arise?
The Settlor and the trustee execute the trust document (or settlement as it is also known) which contains the
first settlement usually 100 pounds or shares in an offshore company.
Assets such as property, marketable securities, and bank accounts would need to be conveyed, transferred
or gifted to the trustees in accordance with the laws of the country in which the asset is situated.
The trustees hold and manage those assets for the benefit of certain persons who are usually named in the
trust and are known as beneficiaries.
What are the Advantages of a Gibraltar Trust?
• Confidentiality both as to administration and distribution of assets.
• No requirements to file accounts nor to register a trust (other than an asset protection trust) (but see
accounts note below).
• The assets of such a trust can be held in any currency. There are no exchange controls.
Who is the Settlor?
The person who transfers assets to the trustee is known as the Settlor because he settles his property on the
trustees. Once the property is settled the property no longer forms part of the Settlor’s net wealth. The assets
can now be held, administered and distributed confidentially. There is no need for a Will, the property will be
administered and distributed taking account of the Settlor’s wishes as expressed to the trustees from time to
time.
Letter of Wishes
The Settlor normally provides the trustees with a Letter of Wishes in which he sets out how he would like his
trustees to deal with the assets of the trust during his lifetime and in particular on his death. The trustees can
have regard to the wishes of the Settlor at any time and any matter set out in the Letter of Wishes can be
amended from time to time during his lifetime.
Protector (sometimes referred to as a Counsellor)
A Protector may be appointed to supervise the Trustees. Where a Protector is appointed the trustees may not
exercise certain of the powers contained in the trust deed without the written consent of the Protector. It is not
unusual to also give the Protector the power to remove and appoint new trustees.
The Protector is usually the Settlor’s adviser or close friend.
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Bankers, Stockbrokers and Investment Advisers
In cases where the trust assets need management and the trustees themselves do not have the
necessary expertise they may appoint bankers, stockbrokers or investment advisers to advise them. However,
the trustees themselves will take the main policy and investment decisions after due consideration of the
professional advice given.
Accounts
The trustees are required to prepare accounts for trusts under administration.
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What are the Advantages of a Gibraltar Trust?
Law
The Trustee Act creates the framework. Whilst outlining the powers and duties of trustees, the investment of
trust funds and the powers of the court, it is to the trust deed itself which one must look at on the whole.
Perpetuity Period
The perpetuity period is 200 years.
Variation of Trusts and Powers of Investment
The UK Trustee Act of 1925 has not been implemented in Gibraltar however, certain amendments to our
laws have been made so that trusts may now be varied and wider powers of investment made available to
trustees.
Gibraltar’s trust law now allows the variation of trusts by applying the UK Variation of Trusts Act 1958.
Extensive investment powers similar to those contained in the UK Trustee Investment Act 1961 were
introduced by the Trustee Investment Act. The powers of delegation conferred on trustees by the UK Trustee
Act 1925 and the Powers of Attorney Act 1971 are now contained within our Trustee Act.
Effectively the Anglo-Saxon trust is fully embedded in Gibraltar’s laws.
Forms of Trust
A variety of trusts can be established in Gibraltar, however the most extensively used form of trust is
the Discretionary Trust with the Settlor providing a Letter of Wishes to the trustees which may be varied from
time to time.
Recognition of Trusts
The Courts will apply the proper law of the trust to determine its nature and validity. The Trusts (Recognition) Act
applies the provision of the Hague Convention whereby a trust is governed by the chosen law of the
Settlor. Usually Gibraltar trustees, be they individuals or a trust corporation, are appointed and the trust
specifically refers to the proper law of the trust as being Gibraltar law.
Emigration of Trusts
Gibraltar trust law allows the trust to include a clause enabling a change of the proper law of the trust and of
its place of administration.
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Setting Aside a Trust
In certain instances a trust may be set aside. If a trust is set up for an illegal or immoral purpose or is
contrary to public policy it will be declared void. A trust set up to defraud creditors will be set aside by the
courts. A trust, not being a trust created before and in consideration of marriage, or made in good
faith and for valuable consideration is, if the Settlor becomes bankrupt within two years after creating the
trust, void against his or her trustee in bankruptcy. If he or she becomes bankrupt at any subsequent time
within ten years from the creation of the trust, it is void against the trustee in bankruptcy unless the parties
claiming under the trust can prove that at the time of creating the trust he or she was able to pay all his or her
debts without the aid of the trust property.
Asset protection trusts are treated differently.
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Other Forms of Trust?
Asset Protection Trust
An amendment to the Bankruptcy Act made in 1990 now enables Asset Protection Trusts to be established. The
amendment to the Bankruptcy Act means that certain dispositions shall not be voidable at the instance of or
upon an application by any creditor or Settlor provided certain conditions are complied with.
The settlement of assets will not be voidable by any creditor to the Settlor provided that:
1. The Settlor is an individual.
2. The Settlor is not insolvent at the date of the settlement.
3. The Settlor does not become insolvent in consequence of the settlement before the settlement is
registered.
An application for registration of the Settlor must specify:
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The name and address of the trustee.
The name of the settlement.
The date of the settlement and its duration.
The Settlor’s country of residence.
The application must also be accompanied by undertakings from the trustees that:
1. The Settlor has completed forms of enquiry.
2. The trustee has completed all reasonable enquiries necessary to substantiate the information provided
by the Settlor.
3. The Settlor has sworn an affidavit confirming that he or she is not insolvent.
At present the fee payable on making an application for registration is £300 and thereafter an annual fee
of £100 applies.
Applications to register are made by the trustee, which must be a company with a permanent place of
business in Gibraltar and authorised by the Financial Services Commission to act as trustee of protective
settlements.
Gibraltar Trusts
With regard to the taxation of such a trust, the income of a trust created in Gibraltar by and on behalf of a
non-resident of Gibraltar is exempt from Gibraltar tax even if the trustees are resident in Gibraltar. This
particular provision requires that, under the provisions of the trustee, no Gibraltarian or resident of Gibraltar is or
may be a beneficiary under the trust and that the income of the trust either accrues or derives outside
Gibraltar.
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Why Fiduciary Group?
Experience
Fiduciary Trust Limited is duly licensed by the Financial Services Commission and is associated with the oldest
and longest established law firm in Gibraltar. Its directors include Peter A Isola BA, a Notary Public and Albert J
Isola, BA.
Both are lawyers are members of the Society of Trust and Estate Practitioners. Members of STEP include the most
experienced and senior practitioners in the fields of trusts and estates. Peter A Isola was the founder Chairman
of the Gibraltar Branch of STEP.
Cost Effective, Reliable and Efficient Service
Fiduciary is fully aware of the needs of professionals and Settlors (individuals who transfer assets into a Trust) who
require a professional, efficient and reliable service which at the same time is cost effective.
Fiduciary trust is happy to work with the legal and tax advisers to ensure that the trust is tailored to meet the
needs and requirements of the Settlor.
We are happy to advise on the opening of bank accounts, and the appointment of investment managers
where appropriate.
Cost Effective, Reliable and Efficient Service
Establishment of a Gibraltar trust.
Provision of a professional trustee.
Administration of trusts.
The incorporation of Gibraltar, British Virgin Island or other offshore companies required to hold assets.
Provision of directors for such underlying companies.
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