Trusts in the Isle of Man

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A trust is a fiduciary relationship which is formed when a person called the trustee receives an asset from another person called the settlor to hold for the benefit of a third person called the beneficiary, on terms defined in the trust deed.

Isle of Man Trust law is closely modelled on English trust law. The principal Isle of Man trust statute is the Trustee Act 1961 as amended by the Trustee Act 2001. Isle of Man legislation places a high duty of care on trustees which provides added protection for settlors and beneficiaries.

A trust imposes strict obligations upon the trustees to manage and deal with the trust assets in accordance with the terms of the trust and in the best interests of the beneficiaries.

The assets passed into the trust arrangement are legally owned by the trustee in trust for the beneficiaries. The beneficiaries have an equitable interest in the assets held in the trust. Beneficiaries can enforce their equitable rights in the Island’s courts.

The settlor can retain some influence over the way the trust assets are administered through the terms of the trust deed and if appropriate, a letter of wishes.

The most common method of establishing a trust is by the execution of a trust deed and the transferring of the trust assets to the trustees.


Advantages


The advantages of an Isle of Man trust may include asset protection, tax planning opportunities, estate planning, confidentiality and in some cases avoidance of forced heirship rules.

The more popular types of trust that exist are:


Discretionary


Trustees of a discretionary trust have full discretion over the appointment of income and capital for the benefit of the beneficiaries and the trustee must consider the provisions of the trust deed when decisions are made.

The settlor can provide the trustee with a letter of wishes setting out his/her suggestions regarding the distribution of assets. The letter, although giving useful guidance to the trustee is not binding.


Interest in Possession Trust


This is a trust under which a beneficiary has an absolute entitlement to the net income of the trust for a specified period, after which the trustee may have discretion regarding both the income and capital of the trust.


Accumulation and Maintenance Trust


These permit the trustees to appoint the capital and income of a trust for the maintenance of a beneficiary (usually for educational purposes), before the date on which the beneficiary becomes entitled absolutely to the trust assets.


Will Trust


This type of trust is automatically created on the passing away of an individual who decrees that a will trust be formed on his death. The management and assets of the trust are determined by the will of the deceased, as are the beneficiaries of the will trust.


Purpose Trust


Purpose Trusts are formed for a particular purpose rather than for the benefit individuals.


Grant Thornton (Isle of Man) Services Limited


Grant Thornton (Isle of Man) Services Limited is an in-house trustee company which provides trustee services including the establishment and administration of Isle of Man trusts.

Our trustee is able to set up and administer a trust and deal with the settlor, beneficiaries and intermediaries where necessary, employing the due care and skill required of a trustee and taking care to manage the trust in the most tax efficient manner.

Please view the Trust Questionnaire for information required before a trust can be formed.

Isle of Man Trust Legislation

  • Trustee Act 1961 – deals with administrative matters such as investment powers of trustees, appointment and discharge of trustees and the powers of the court
  • Variation of Trusts Act 1961 – allows the court to vary the terms of a trust upon a beneficiary's application
  • Perpetuities and Accumulations Act 1968 – provides for the duration of a trust and the trustee's ability to accumulate income
  • Recognition of Trusts Act 1988 – extended the terms of the Hague Convention on the Law Applicable to Trusts and Their Enforcement to the Isle of Man and provided for the recognition of foreign trusts
  • Trusts Act 1995 – excludes property held in Manx Trusts from foreign heirship laws and other laws concerning the creation of trusts of non-Manx assets
  • Purpose Trusts Act 1996 – allows non-charitable purpose trusts to be created under Manx law
  • Trustee Act 2001 – enacted to widen the powers of trustees, as well as to impose safeguards for beneficiaries



If you require further information please contact either:


Dennis McGurgan


Kathy Martin


Jane Wolstencroft