March 20, 2018 Jacinda Michell

OFFSHORE TRUST A HISTORY

BY JACINDA MITCHELL

Trusts have been used as estate planning and asset protection instruments for hundreds of years.

The concept of trusts can be dated back to early Roman law. Roman law held two concepts- fideicommissum and fiducia. These two ideas greatly reflect modern day trust law which this article will delve further into. Other concepts of trusts are also the eleventh century when English crusaders knights would entrust the care of their manors end estates to friends whilst they were crusading and reclaim them upon return.

Fideicommissum effectively means the owner of a property transfers this property to another person, subject to it being transferred from that person to yet another person at a later stage. In early Roman law, there were two types of fiducia. Firstly there was fiducia cumamico. This was a simple agreement between a fiduciant (settlor) and a fiduciarius (a friend acting as ‘trustee’). In this case, a fiduciant would transfer their estate to the fiduciarius who was obliged to use it according to the terms of the agreement and then return it as per the terms. Roman citizen’s travelling abroad would often utilise this form of law. It also makes one think of the English crusading knights leaving their property in care of a friend. Secondly there was fiducia cum creditore. The device reflects a modern day loan. The fiduciant transferred ownership of the chattels to the fiduciary on condition that they would transfer them back again when the debt was paid. The above trust devices all reflect modern day trust law and show how trust law established in different locations evolved in different ways.

Offshore trusts came into play during the first half of the 20th century. The wealthy utilised offshore trusts for the asset protection that was offered and for tax efficiency simply because the trust was in a different jurisdiction. In the early 20th century, offshore locations were usually conveniently close due to dealing with offshore locations. For example, Jersey in the Channel Islands was used for Britain, and the Bahama’s for the United’s States. As the end of the 20th century drew nearer offshore trusts had rapidly expanded in both number of jurisdictions and volume of business. This would have contributed to society developing in ways such as telecommunications, air transport and the end of capital controls and also people wishing to avoid high tax rates.

Today, offshore trusts are thriving and are established in jurisdictions all over the world such as the Cook Islands, St. Kitts & Nevis. Many people seek out reputable companies to ensure that their assets will be protected from claims of creditors.

If you are considering establishing an offshore trust for yourself, Southpac Group has been in operation as a professional trustee company since 1982, that’s 36 years! Southpac has built up an excellent professional reputation and is one of the largest and longest serving trustee companies in the Cook Islands. An efficient, reputable company for your wealth and asset planning needs.

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