Discretionary trusts
The most common type of offshore settlement is the
discretionary trust and under such an agreement it is possible for
the Settlor to retain some influence over the trustees'
actions by issuing a letter of wishes to the Trustees for
their guidance. Such a letter is not legally binding but affords
flexibility as it may be altered from time to time by the
Settlor.
Discretionary trusts are popular in the offshore environment
because they can provide maximum versatility at the same time
as offering protection from hostile government expropriation or
taxation. By creating a trust the Settlor ceases to own assets
which consequently do not form part of his or her estate, as on his
or her death they continue to be held by the Trustee.