Securing the Future through a Trust in Mauritius
Client Profile:
- Name: John Doe
- Age: 45
- Nationality: Zimbabwean
- Occupation: Entrepreneur
- Family: Wife(Jane, 42), Two Children (Emma, 15; Oliver, 12)
Financial Profile:
- Net Worth: $5 million
- Assets: Real estate properties, stock portfolio, private company shares, savings.
Objective:
John Doe wants to ensure the financial security and stability of his wife and children in the event of his untimely demise or incapacitation. He is particularly concerned about providing for their educational needs, healthcare, and overall living expenses. He also wants to ensure that his assets are managed efficiently and that his family benefits from potential tax advantages.
Trust Structure in Mauritius
John decides to establish a trust in Mauritius due to its reliable legal framework, confidentiality, and tax-efficient environment. Mauritius is known for its comprehensive trust law and offers several types of trusts, including discretionary trusts, which are suitable for John’s objectives.
- Type of Trust: Discretionary Trust
- Trust Name: The Doe Family Trust
- Trustee: Blue Azurite Ltd (a licensed qualified trustee in Mauritius)
- Beneficiaries: Jane Doe (wife), Emma Doe (daughter), Oliver Doe (son)
- Protector: Richard Smith (John’s trusted friend and advisor)
Steps to Establish the Trust
Consultation and Planning:
- John meets with Richard and the trust experts at Blue Azurite in Mauritius to discuss his goals and the best trust structure.
- They decide on a discretionary trust, giving Blue Azurite the flexibility to distribute income and capital to the beneficiaries as per John’s wishes and the trust deed.
Drafting the Trust Deed:
- The trust deed is drafted, outlining the terms and conditions of the trust.
- Key provisions include the trustee’s powers, the protector’s role, the rights of beneficiaries, and specific instructions regarding the distribution of assets.
Appointment of the Qualified Trustee and Protector:
- Blue Azurite is appointed as the qualified trustee, responsible for managing the trust assets and making distributions.
- Richard Smith is appointed as the protector, with the authority to oversee Blue Azurite’s actions and ensure they align with John’s intentions.
Funding the Trust:
- John transfers assets into the trust, including real estate properties, a portion of his stock portfolio, and shares of his private company.
- The trust deed specifies that additional assets can be added to the trust in the future.
Registration and Compliance:
- There is no obligation to register a trust in Mauritius. However, it is recommended to do so to provide proof of the trust’s existence, which is particularly important when seeking tax treaty benefits.
Trust Operations and Management
Investment Strategy:
- Blue Azurite, in its capacity as qualified trustee, in consultation with the financial advisor(s), develops an investment strategy to grow the trust assts while preserving capital.
- The strategy includes a diversified portfolio of stocks, bonds, and real estate investments.
Distributions and Support:
- The qualified trustee, Blue Azurite, is instructed to make periodic distributions to Jane for household expenses and children’s education.
- Specific funds are allocated for major expenses such as university fees and healthcare.
- Discretionary distributions are made based on the needs of the beneficiaries and the qualified trustee’s judgment.
Tax Advantages:
- Mauritius offers favourable tax treatment for trusts, including no capital gains tax and exemptions on certain foreign income.
- The trust benefits from these tax advantages, thereby maximising the wealth available for the beneficiaries.
Scenario: John's Demise
Immediate Actions:
- Upon John’s demise, Blue Azurite takes immediate steps to ensure the continuity of financial support to Jane and the children.
- The protector, Richard Smith, ensures that Blue Azurite adheres to the terms of the trust deed.
Long-term Management:
- Blue Azurite continues to manage the trust assets, making regular distributions as outlined in the trust deed.
- The trust provides for Emma and Oliver’s education up to university level and supports Jane in maintaining the family’s standard of living.
Additional Provisions:
- The trust deed includes provisions for extraordinary circumstances, such as medical emergencies or significant financial needs.
- The protector has the authority to approve such distributions to ensure the family’s well-being.
Peace of Mind
- John has peace of mind knowing that his family is well taken care of, even in his absence.
- The trust structure provides a clear and effective mechanism for asset management and distribution.
By establishing a discretionary trust in Mauritius, John Doe successfully secures the future of his wife and children, ensuring their financial stability and well-being. The trust provides a flexible, tax-efficient, and professionally managed solution, tailored to meet the family’s needs and John’s long-term objectives.
