Offshore trusts—general principles

This subtopic covers the non-taxation aspects of offshore private trusts. For guidance on the taxation of trustees, settlors and beneficiaries of such trusts, see: Offshore trusts—taxation—overview.

Guidance on onshore and offshore commercial trusts, including employee benefit trusts, can be found in the Commercial uses of trusts—overview and Share incentives (Private Client)—overview.

What is an offshore trust?

An offshore trust is simply a trust, the trustees of which are resident outside the UK, usually in a no/low tax jurisdiction.

Most offshore trust jurisdictions follow the basic common law principles of trust law, but are likely also to contain additional features such as:

•
the ability to appoint a protector
•
longer or unlimited duration and ability to accumulate income
•
clauses which enable the trust to re-domicile to another jurisdiction (also known as 'flight' or 'flee' clauses)
•
provisions which insulate the trust assets from attack by those claiming by reason of a personal relationship with the settlor (also known as 'firewall provisions')
•
the ability to create trusts for non-charitable purposes, or trusts with both beneficiaries and specified purposes

The most commonly used offshore trusts are:

•
discretionary

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