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.