But in practice, not all trusts are created equal. Some providers and jurisdictions offer low-cost solutions built on standardized templates with minimal customization or legal advice. While these may appear cost-effective upfront, they often fail to reflect a family’s long-term intentions, and can carry unintended legal and tax consequences. For families serious about protecting and preserving their wealth, the quality of legal advice and drafting is paramount. So too is the selection of a reputable trustee, one who is not only reliable but also capable of faithfully executing the terms of the trust over generations.

Types of Trusts

Beyond bespoke drafting, there are different categories of trusts, each suited to different needs and objectives. Common types include:

• Revocable Trust
  A revocable trust allows the settlor to retain control and revoke the trust at any time, reclaiming the assets. While this flexibility offers comfort, it compromises asset protection, as the assets are not legally separated from the settlor’s estate.

• Irrevocable Discretionary Trust
  One of the most commonly used structures, an irrevocable discretionary trust formally distances assets from the settlor and beneficiaries. The trustee holds full discretion over distributions, guided by the trust deed and potentially a Letter of Wishes. While the trust is, in theory, irrevocable, specific provisions may allow limited reversibility under certain conditions, subject to the trustee’s agreement. This structure offers both flexibility and robust asset protection.

• Life Interest Trust
  Designed to benefit a single individual (the ‘life tenant’) during their lifetime, this trust ensures a defined stream of income or access to assets. Upon their death, remaining assets pass to a named beneficiary (the ‘remainderman’). Trustees have limited discretion, as entitlements are fixed.

• Fixed Interest Trust
  This structure provides fixed entitlements to income or assets for multiple beneficiaries, either by proportion or for designated purposes. While it can be useful for clear-cut distributions, its rigidity can be a drawback over time, particularly as family needs evolve across generations.

• Purpose Trust
  A unique structure without beneficiaries, a purpose trust exists to fulfil a defined objective, typically to hold assets such as shares in a Private Trust Company. These trusts are often used in more complex estate or corporate structuring and must be carefully designed to meet legal enforceability requirements.

Jurisdiction Matters

The jurisdiction in which a trust is established can significantly influence its legal framework, tax treatment, and administrative flexibility. Selecting the appropriate jurisdiction is not just a legal decision but a strategic one, and should align with the type of trust, asset location, and family goals.

A Final Word

Trusts offer extraordinary flexibility, but only when they are set up correctly. High-quality legal advice is essential, not only in drafting the trust deed but also in shaping supporting documents such as the Letter of Wishes. While not legally binding, this letter plays a critical role in guiding trustees and ensuring the spirit of the trust lives on.

For families looking to secure their legacy, a trust should never be treated as a one-size-fits-all solution. It is a living structure that requires care, foresight, and a personalized approach from the outset.