SUCCESSION PLANNING A settlor having achieved a successful family business may wish to ensure that his assets and business continues for several generations. He may wish to provide for the financial security and opportunities to family members and to manage family wealth through future generations. A trust, therefore, provides an efficient vehicle for the transfer of beneficial ownership interests on the death of a settlor.
Further, because the interests of a beneficiary under a discretionary trust will not
constitute a separate asset under a trust structure, this arrangement may assist in the avoidance of
stamp duty or inheritance tax which may be payable on the death of a settlor or beneficiary.
A trust can be used to hold shares in a company owning immovable property situated outside Mauritius, rather than directly in the real property itself, with the effect of transforming characterization of an interest from immovable to movable, which can present attractive opportunities for tax and financial planning.
ESTATE PLANNING. Trusts can be used to preserve the continuity of ownership of assets, such as a business, within a family. By vesting legal ownership of assets in a trustee, the appointed beneficiaries under a trust may be able to continue to benefit from the assets, whilst avoiding fragmentation of ownership among a future generation of beneficiaries. The use of a trust avoids, on the death of a beneficiary, the risk of a share of assets becoming owned outside the family, and thus enables settled assets to be preserved intact for the benefit of future generations.
PROTECTIVE TRUSTS. A settlor can provide for protection of vulnerable members of a family or certain beneficiaries who may be extravagant and spendthrift.
ASSET PROTECTION. Trusts have often been used for the purpose of protecting assets from risk. Thus, in today’s context, trusts may be used to hold assets in a safe and stable political environment. Trusts can be used as a shield to help protect assets against the potential future liabilities of a settlor or beneficiary, such as punitive financial claims including those arising from matrimonial issues. Trusts can also safeguard assets against strategic risks, such as confiscation or expropriation by the State in the country of the Settlor’s domicile, residence or nationality.
FORCED HEIRSHIP. Where a settlor disposes of assets during his lifetime by settling them on trust, the trust assets will not form any part of the settlor’s estate upon his death. This may enable a settlor to avoid forced heirship rules which may be mandatory under the laws of his domicile, residence or nationality and which would otherwise dictate the persons to whom and proportions in which a settlor’s estate will devolve.
