Trusts are a concept that developed from equity and is widely used for asset protection and for inheritance planning.
A trust is an equitable obligation. A trust is created when a person holds property on behalf of another person. The person who holds the property is called a trustee. The person for whom the property is held is called the beneficiary. The trustee owes a fiduciary duty to the beneficiary. The property the trustee holds is called the trust property.
In Cyprus we have local trusts that are governed by the Trustees Law 1955. This law generally sets out the authorised investments, the general powers of the trustees and how the trustees may be appointed and discharged.
For non-Cypriots more interesting than the local trust is the Cyprus International Trust.
For the Cyprus International Trust to be set up the following requirements must be met:
The settlor must be non-resident
The beneficiary must be non-resident
The trustee must be a Cyprus resident
In both cases a company, branch or partnership with non-Cypriot owners could be settlors, beneficiaries or even trustees.
If the settled property includes immovable property, this immovable property must be outside Cyprus.
The duration of an international trust is up to 100 years and the trust income may be accumulated for that period.
The law does not impose restrictions as to the investments that may be entered into, unlike the local trust that sets out the authorised investments.
The advantage of the trust is that its creation and disposal of property to it may not be challenged on grounds of inheritance or succession law of Cyprus or any other country.
