Offshore trusts are opaque and unfamiliar to many practitioners but they need not be impenetrable, says Peter McMaster
Offshore trusts feature extensively in the financial arrangements of the very wealthy. Created for a variety of reasons, they may offer advantages in fiscal terms, confidentiality, superior arrangements for transmitting wealth between generations—and perhaps even solutions to insolvency concerns.
These trusts are created by settlors transferring assets at their disposal to trustees in overseas jurisdictions. The trust is commonly governed by the law of the offshore territory and subject to the exclusive jurisdiction of its courts. Frequently, the terms of the settlement provide no clear indication of who will ultimately benefit from the settlement. These trusts are commonly encountered in big money divorce cases, where their unfamiliar features can present special problems for those advising the parties.
The recent record-breaking divorce case Charman v Charman [2007] EWCA Civ 503, [2007] All ER (D) 425 (May) involved an offshore trust, Dragon Holdings Trust, with assets of £68m. Dragon had a Bermudan corporate trustee and was subject