Trust Fund Formation

’Trust fund’ is a broad description of a fund established outside your country of residence to serve whichever purpose. Since typically the primary objective of a trust fund is asset protection and tax saving this website concentrates on the type of trust fund designed to protect your assets and gives you the opportunity to reduce your tax costs in the long run…

Foundation of foreign foundations is also known as trust-funds, and they are becoming more and more popular as people realize that it is completely legal. You can with a clear conscience tell your local tax-authorities about the foundation of a trust-fund, if this has been done correctly. We will provide you with all the necessary counselling and knowledge before you decide on anything.

The Trust Fund as a Financial Planning Tool
The trust fund is one of the most flexible financial planning tools available today. Trust funds may be used for practically any purpose, but typically their main function is to protect asses from legal decisions and other settlement transactions – such funds are therefore often referred to as Protective Trust Funds. Another general purpose of trust funds is tax exemption or tax deferment.

Trust funds may be legally based; they may be established by the founder expressing himself/herself verbally or via a written document. A trust fund based on a written document is called a Trust Deed, which is a ‘trust agreement’ or a ‘trust tool’. Elsewhere on the website we explain that trust funds may be located locally or abroad. A trust fund located abroad will give you the biggest advantage as far as protection of assets and tax exemption are concerned. Irrespective of where you set up a trust fund, the establishment and retention of a trust fund can be relatively simple and inexpensive and grant you extensive protection and substantial tax savings in a secure and confidential environment.

The History of Trust Funds
Trust Funds date back to classical Antiquity. The first evidence of a Trust Fund originate from an Egyptian burial chamber where a document was found that contained a personal last wish and testament written in 1805 BC. Trust Funds existed under both Roman and Greek laws. The Trust Fund concept was officially introduced to Roman law during Emperor Augustus Caesar’s reign almost 2000 years ago. The Roman Empire’s accept of Trust Funds came into existence as a result of a deed that was done by a deceitful friend, whom a rich Roman asked to act as his Trustee after his death. Since the Roman’s wife was not a Roman citizen, neither she nor their children were entitled to inherit. Therefore, the rich Roman made a plan to ensure that his property was transferred to his friend, who in return promised to use the inheritance to the advantage of the Roman’s children. However, after the Roman had died, his friend betrayed him and kept the property himself.

When the news of the friend’s deceitfulness reached the Emperor, the friend – in his capacity of Trustee – was brought before the Roman court, which found him guilty of breach of trust, and punished him. This sentence was the first written, legal accept of Trust Funds under Roman law. This instrument since became so popular with the Romans that a special court was established solely to hear Trust Fund cases.

In medieval times, Trust Funds offered further protection against interference in, and prying into, personal financial matters. When the pseudo-religious freemasonry ‘Order of Knights Templar’ acted as international financial intermediaries in Paris, Trust Funds were a common instrument for royalty and the clergy to protect their interests against the public and each other. The Trust Fund may well have been the Western World’s first tax incentive scheme. In 1600-century England, Trust Funds assumed the character of tax concession schemes allowing citizens to evade feudal taxes on inherited and transferred property.

The Concept of Trust Funds

An International trust-fund is an inter-partes contract between the Settlor, the responsible administrator (Trustee) and the beneficiary. The fund is an independent legal entity and can advantageously be used as a holdingcompany, operating company, owner of art, cars and securities, and it can easily be used for offshore investments or as a shareholder in private as well as public listed companies.

Should My Fund be Located in my Home Country or Abroad?
You may choose to set up a foreign trust fund, a so-called ‘offshore trust fond’, or a local fund. A local trust fund is established in you country of residence. A Revocable Living Trust, which can be revoked while the Settler (you) is still alive, is a common example of a local trust fund. However, such funds will not give you tax advantages, and your assets are not protected against litigation. Local trust funds do not grant you the same form of protection from creditors and tax exemption as foreign trust funds.    This is mainly because the assets of a local trust fund are subject to the legislation of you country of residence, which makes them vulnerable to litigation and taxes.

Foreign Trust Funds
Foreign trust funds give you the same benefits as local trust funds, but in addition grant you a number of advantages that local trust funds do not offer. A foreign trust fund will allow you to:

- Obtain a much larger degree of protection from you creditors
- Protect assets, although you are a ‘Trust Fund Beneficiary’
- Obtain substantial tax savings for your heirs
- Achieve a high rate of interest
- Make any kind of investment
- Invest in projects on an anonymous basis
- Own various assets and companies on an anonymous basis

What Do I Need to Do to Set up at Trust Fund?
Very simplified, a foreign trust fund works in the following way: A national of a high-tax environment (you, the Settler) transfers the ownership of selected assets to a national of a low-tax environment, in this case GVC. The trust fund company becomes the Trustee of the trust fund that you set up. This trust fund will establish the basis for the way in which the Trustee is to invest and treat the assets of the trust fund, and define when and what distributions should be made from the trust. You establish the rules that the Trustee is to follow. The Protector (typically the Protector is yourself, a member of your family, a close fiend or a professional company, in this case GVC) works closely together with the Trustee to help you protect your interests, i.e. the Protector is to protect your interests. The transfer of assets to the trust fund gives you (the Settler) two financial advantages: Firstly, the legal ownership of the trust fund will be placed with the Trustee, and you will no longer be liable for tax on your/Settler’s assets, but according to the rules that you initially set up for the Trust fund. Secondly, if the Trust fund is managed professionally it may earn and accumulate income and safeguard the interests of you and your significant others throughout the lifetime of the trust fund.

The Advantages of Foreign Trust Funds
A foreign trust fund serves as a fortress of economic protection which is stronger than family restricted partnerships or any other fund that you may establish at your nearest bank/law firm. The trust fund lets your assets ‘immigrate’ while you stay at home. When you transfer assets to the trust fund the assets become subject to the legislation of the country in which the trust fund is located, and thereby you remove the assets from the jurisdiction of your country of residence. In that way, a foreign trust fund offers you freedom as well as security. Every dollar, pound, yen or franc that you transfer to the trust fund, is a dollar, pound, yen or franc that your country’s government cannot claim from you.

Just like tax exemption is a key word for a professionally structured trust fund the fund is also a fortress, exactly because it is located abroad. The assets that you transfer to a professionally structured foreign trust fund ‘leave’ the jurisdiction that applies to your other assets. A foreign trust fund also keeps your assets out of reach of potential creditors or authorities. This is because a trust fund allows you to transfer the ownership of an asset, but lets you keep the benefits of the asset. It is the transfer of ownership that protects your asset: So irrespective of what happens at home, your assets will be in the trust fund when you need them. The trust fund (you) have the accumulated assets at your disposal.

Financial Privacy
When you establish a trust fund in a foreign tax haven a ‘private zone’ is formed around the trust fund. This means that no one can obtain information from the Trustee. All information about who is the founder or beneficiary and about the assets of the trust fund is completely confidential.

Can the Trust be registered as the owner/founder of My UK Company or my Offshore Company?
YES! Many shareholders / investors use such a structure in order to ensure full anonymity of the ownership. This is particularly seen within the field of internet trade (web shops etc). Since many shops sell their products via the internet the company no longer has to be located onshore, it can just as easily be owned by an offshore company founded and owned by a trust fund.

Another Important Target Group is Investors
By using this structure investors will have the opportunity to place their investments in an ‘IBC offshore company’ and via this company invest on stock exchanges all over the world. In this way, the accumulated return becomes tax free.

Estate Planning
Assets such as deeds of conveyance and homeowner’s equity can also be transferred to a trust fund.
Inheritance, last will and testament, financial planning for you heirs
Contrary to assets that you may leave in your will or testament, assets that you leave in a trust fund will never become subject to inheritance tax. The trust fund itself may become a strong financial tool that may benefit you heirs for generations. After you have passed away, the trust fund will automatically favour the heirs you selected, according to the rules you laid down when you were alive. Besides, your heirs will be able to use the trust fund to protect their own assets and reduce their tax bill.

Immediate Advantages
At first, it may be hard to grasp how simple it really is to benefit from the protective effect and strength of a foreign trust fund also called an ‘offshore trust’. If all you want to achieve with your trust fund is protection from potential creditors, you will achieve this protection immediately without any specific condition or complex tax planning. Assets that you transfer to the trust fund ‘are hidden’ until you or another beneficiary need them. No one can claim these assets, and no one can force you to transfer them back to your country of residence.

Beneficiaries are the persons who benefit from the fund and who receive funds or assets from the fund; they are the people that you select to benefit from the fund in your lifetime or the ones who are to inherit the assets of the fund after you have passed away. Beneficiaries may or may not be named in a ‘trust certificate’. You can name individuals or a group or class of individuals, such as ‘all surviving children’. In addition to individuals, or classes of individuals named as Beneficiaries you are allowed to name companies or charities, associations, partnerships, other funds or any other Danish or foreign legal unit.

Based on Trust Between the Parties
It is in the own interest of the Trustee to comply with the Settler’s (the founder’s) reasonable requests, since the Trustee would probably otherwise be without a job. When it comes to offshore trust funds the most common question is: ‘How will I know if I can trust a Trustee?’ When another person, particularly a stranger in a foreign country, manages your money, you may naturally be concerned that the Trustee is a fraud, looses your money or makes bad investments. However, there is no cause for concern. Foreign Trustees are known for their impeccable reputation in terms of honesty and good judgment. Actually, we are not aware of a single case in which a person has lost a single cent on account of theft by a Trustee. Another important element in this regard, over and above the inherent integrity of the Trustee, is that an offshore tax haven cannot afford fraud scandals. Foreign Trustees earn their living from building confidence and thereby attract foreign investors. If one Trustee should turn out to be dishonest in some way or the other, the tax haven would quickly take action to provide compensation because it cannot afford, and does not want, the negative publicity.

Asset Protection Trust Funds
Protective trust funds are a new form of trust fund. If you have assets, which need protection from a court that claims the assets, the legislation in relation to foreign trust funds will be of help to you.    Some small countries, including miscellaneous tax havens, are not subject to other countries’ court decisions. Such court decisions may be with regard to business, divorce, negligence, inheritance or even defamation. These countries have now introduced legislation that reduces the period within which legal action must be taken, to a relatively short period. When your assets have been located, it will often be too late to initiate legal proceedings. This type of trust is very common in countries such as the US.

Protection also for Professional Business Segments
Malpractice, negligence and business liabilities. Naturally the law does not allow trust funds to override the rights of creditors or to deceive pending creditors, but trust funds may be an efficient means against unknown, future creditors. A protective trust fund can be a way in which to reduce or eliminate a specialist’s (for example a doctor), or a businessman’s potential risk of malpractice charges etc.      The first step toward protection of your assets is to set up a trust fund in a jurisdiction in which the law stipulates a relatively short period for legal hearings. Although the trust fund has been set up abroad, your assets will not have to physically leave your country of residence. Complex legislation makes it extremely difficult for your opponents’ lawyers to gain access to the assets, even if a court has taken legal proceedings against you. This gives you the opportunity to reach a far less costly settlement than you may have obtained under a compulsory settlement. Actually, a typical settlement in such cases is often a mere 15 % of the original claim. One example was a doctor facing claim for damages of $7m, who reached settlement at only $18,000. Perhaps the greatest advantage of a protective trust fund is the security in knowing that you protected from potential financial attacks.

Another common purpose for setting up this type of trust fund is in business. Being the owner or director of a company, you may need protection against business fraud, product errors etc. It may perhaps be an advantage that your expensive machinery is owned by a fund. In the event of bankruptcy etc. your machinery will be safeguarded and you will not loose it.

Or maybe you have had to provide a personal guarantee for the financial and personal loans or lease agreements of the business? Your personal assets will be protected in case of your company’s inability to pay.

Divorce and other Settlements
Many people use a protective trust fund to protect themselves against unfair divorce cases. Particularly wealthy individuals use this form of trust fund to exclude assets or objects from the joint estate.              A protective trust fund is a more potent solution than a simple marriage contract providing for separation of property. In countries with forced heir ship law, and where the aim of the legislation becomes more stringent, such trust funds are gaining popularity.

Alternative Opportunities with Trust Funds

- Avoid Bills of Exchange control or settlement of assets (particularly transferable assets) by the authorities
- Protect assets in foreign companies
- Cancel or postpone tax bills
- Cancel an illegitimate heir’s declared right to your property
- Put money aside for children’s education

Countries in which this type of trust fund is set up have no treaties that render it possible for foreign legal systems to act. For example, if you have a family restricted partnership the trust fund can act as a restricted partner, or the owner of an organisation that functions as a general partner. In family businesses a foreign trust fund can protect the business by acting as the owner of some of or all of the shares.

Clause to Provide Against Wastefulness
This clause gives the Trustee the right to set aside requests to transfer the Beneficiary’s rights or assets to creditors until the danger has passed.

Transfer Provision
This provision authorises the Trustee to transfer the trust fund to another country and thereby protect the trust fund against unforeseeable changes in the country in which the trust fund was originally set up. The transfer provision will also cause the Beneficiaries’ creditors to abstain from attacking the trust fund, as they will know that the trust fund may move to another destination in a moment. It is significant that the discretionary power of the Trustee is not a license to act arbitrarily or capriciously. On the contrary, the Trustee is obliged to follow the Protector’s and the Founder’s advice and instructions, and since the business of the Trustee is to earn a Trustee fee, the Trustee will usually seek to avoid being replaced. So you can expect your Trustee to take your advice extremely seriously and comply with your recommendations; you are the customer.
The Trustee is further obliged to fully meet his/her discretionary responsibility and to do so appropriately. For the Trustee discretion is an obligation, and this obligation is imposed by law. For the above reasons, and since the Trustee is a professional company, assets held in a trust fund are safe. You have an additional safety, since you/or the Protector can remove and replace a Trustee as you wish.

As described on this website, a correctly structured foreign trust fund is designed to protect you and your assets. By choosing the right location for your foreign trust fund, you become subject to legislation that is positive to persons who wish to keep and protect what they have earned and a legal system that is hostile to greedy US and European lawyers etc. You place your assets in a jurisdiction that respects the stability of the law and thereby a legal system which does not care to test new legal theories.
With a foreign trust fund you work with a foreign Trustee. The foreign Trustee is able to do what a local Trustee cannot, i.e. deny the claims of local courts and bureaucrats. To use a foreign trust fund is a discreet and easy way to protect your assets from lawsuits. All you need to remember is that the Trust fund is foreign and therefore not subject to the legislation of other countries than that in which it was founded.

NB: Keep in mind that it is fraudulent to transfer assets after legal action has been undertaken. However, even under such circumstances a court cannot force the debtor, who is the Founder, or a Trustee to remove assets from the fund. The trust fund breaks the ownership link between Settlor and the assets. Furthermore, the anti-coercion provision of a fund gives the Trustee the right to ignore any request from Settlor or Beneficiaries demanded by a court order. The creditor, or the person bringing the action against you, may attempt to raise a claim at the tax haven, but the legislation of these countries is laid out to make it extremely difficult, if not impossible, to collect assets under such circumstances. Even if a creditor would succeed in collecting the assets the Trustee may then refer to the Transfer Provision of the fund, and in accordance with this provision transfer the fund to another tax haven, thereby forcing the creditor to initiate a new lawsuit. A trust fund is the most efficient, legal alternative for the protection of your assets.

What can a Trust Fund do in Connection with Bankruptcy?
It is essential that you inform the bankruptcy court honestly and correctly of any recent transfers to a trust fund that you may have a personal interest in. Dishonest reporting in a bankruptcy case is fraudulent conduct.

Can a Court in the EU Seize the Assets of a Trust Fund?
No! Discretion is a ‘nasty’ word for bureaucrats. Therefore, discretion has almost become unattainable in Denmark in our days. The government neither respects, nor guarantees the protection of your privacy. Your private records and transactions are not protected. Our government wants a bigger share in your wealth, so every year the government seeks for more money via higher taxes and duties that it can confiscate from you and your family. The government uses every excuse, including concerns about maintaining the safety of the nation and the control of crime, to invade you financial privacy. Your financial documents can be seized or can be required handed over, not only from you, but also from your bank, accountant, broker or financial adviser. Do you think that your income tax return is confidential? No so! New rules give the tax authorities the right to employ sub-suppliers to review income tax returns. These new rules have established that passing on income tax returns to companies outside the tax authorities is not a violation of the tax payer’s right to confidentially. What do you think?

Trust Fund Pricing

This Trust-package contains all necessary documents and services you need to form a trust-fund. As our customer you will have access to support, counselling and administrative services.

Complete Trust Fund Package Includes

- Forming of Trust
- Appointment of Trustee
- Registered address
- Trust Deed
- Bearer Certificate
- Trust-account with debitcard
- Yearly Trust-fees

Total Cost: 1,298€

Yearly Maintance Price: 450€

To order the Trust Fund package please contact us or use our on-line order form. You can also contact us if you have more questions regarding Trust Funds.