In short, a purpose trust is one established for a specific non-charitable purpose and, unlike traditional trusts, does not have beneficiaries. Whilst purpose trusts share many of the characteristics of the traditional trust, and are subject to similar requirements, there are a number of important distinctions.
For example, a Guernsey-law governed purpose trust can be established for a wide range of purposes, providing such purposes are consistent with public policy and not contrary to the Guernsey law. Furthermore, and unlike non-purpose trusts, a purpose trust must have an enforcer whose duty it is to enforce the trust in relation to its non-charitable purposes and to ensure that the trustee applies the trust fund properly and in furtherance of the stated purposes.
We have seen such trusts used in a variety of commercial contexts including for:
- Conducting off balance sheet transactions
- Holding shares in private trust companies
- Isolating ancillary assets from principal transaction vehicles
- Holding voting or management shares where ownership needs to be segregated from ordinary or non-voting shares or a manager/promoter
- Holding voting shares to ensure the continuity of ownership and management of family businesses furthering quasi-charitable purposes where there is doubt as to the principal purpose falling within one of the recognised heads of charity
As a leading provider of trustee and corporate administration services, Trust Corporation International is ideally placed to partner with clients looking to establish such vehicles. The technical principles applying to this area of law are constantly evolving, as are the commercial uses such vehicles can be put to. Having a professional trust administration team, coupled with in-house legal and taxation expertise, means that we are ideally placed to manage such vehicles and to spot potential pitfalls arising from their use before problems arise.
We provide a wide range of trust-related services, each tailored to suit the needs of the trust in question, including:
- Protectors and enforcers
- Trust formation, management and administration
- Accounting and reporting