Trusts, wealth management, and succession planning
Trusts remain one of the most effective instruments available to ultra-high-net-worth (UHNW) families for wealth management and planning for succession across generations. By separating legal ownership, which resides with the trustee, from beneficial ownership, trusts enable UHNW families to define precisely how assets should be managed and distributed. This structure allows for long-term continuity and control, helping to secure the financial wellbeing of spouses, children and other beneficiaries in line with the settlor’s wishes.
Trusts also work in tandem with other planning tools, including wills that feature a pour-over clause, Irrevocable Life Insurance Trust (ILIT) that provides estate liquidity, and enduring powers of attorney for instances of incapacity. Trustees often coordinate across this legal framework, ensuring that the settlor’s full estate plan is effective, coherent and resilient.
What is a UHNW?
An ultra-high-net-worth (UHNW) individual is someone with a net investable wealth of at least US$30 million, excluding their primary residence. UHNW clients require tailored legal, fiduciary, and wealth planning services to preserve and grow their capital across generations.
Control and continuity
Trusts offer a high degree of control, ensuring that wealth is distributed according to the settlor’s intentions. They can be structured to provide equal or bespoke distributions such as funds for education, health care or charitable purposes. This helps reduce family disputes and supports specific life goals.
Confidentiality and probate
Wills become public during probate, exposing family matters to scrutiny. In contrast, trusts operate confidentiality in jurisdictions such as the British Virgin Islands or the Cayman Islands, where trust deeds are not filed publicly.
Estate efficiency
Trusts can reduce estate and inheritance tax exposure when structured properly. An ILIT, for example, ensures the death benefit of a life insurance policy passes outside the taxable estate. In jurisdictions such as the BVI, Cyprus or Cayman, international trusts are often exempt from local income, capital gains and inheritance taxes. Settlors must still meet their domestic tax obligations.
Cross-border flexibility
For global families with assets and beneficiaries across multiple jurisdictions, trusts provide a centralised and coordinated structure. Trustees, working with advisers in the US, UK, Asia or Latin America, manage legal reporting, tax filings and compliance across borders. This provides both clarity and efficiency.
Asset protection
While not intended to shield assets from lawful claims or obligations, well-structured and properly funded trusts can provide a level of protection from future creditor exposure, assuming they are established in good faith and in accordance with legal requirements. In many cases, assets held in trust are not directly accessible to creditors of the beneficiaries, helping to support the long-term stability of family wealth.
Taken together, these features make family wealth trusts a thoughtful and effective planning tool. They allow UHNW families to set clear terms for the management and distribution of assets, provide resilience against unforeseen challenges, and support long-term stewardship across generations. In doing so, they translate complex estate planning goals into enduring legal structures.
Why trusts are essential in wealth planning
Trusts offer far more than the simple asset transfers enabled by a will. They enable UHNW families to build in flexibility, conditional access and long-term oversight. Using a trust deed and a non-binding letter of wishes, a settlor can create provisions for age-based distributions and milestone achievements. Examples include graduation from university or the fulfilment of personal development goals. These tools help ensure that beneficiaries are adequately prepared for responsibility.
Trusts also provide effective management for complex assets such as private equity interests, family companies or art collections. Trustees, particularly professional or corporate trustees, bring fiduciary oversight and investment rigour to managing such assets and ensure they are handled with care.
Confidentiality is another major advantage. Trust assets do not pass through the probate system for the beneficiaries to take possession of these assets and therefore remain confidential. This is crucial for families seeking to preserve discretion over holdings such as family businesses or sensitive financial assets. Wills can be structured to pour over residual assets into a pre-established trust, creating a seamless transfer of the estate.
Finally, trusts provide continuity in the face of incapacity. Where a will or power of attorney may require court involvement during periods of mental incapacity, a trust continues to function without disruption. Trustees remain in control of the trust assets and ensure they are managed in line with the settlor’s long-term plan. This continuity is particularly valuable for families with illiquid or high-maintenance assets such as property portfolios or operating businesses.
In summary, trusts offer structured, private and professional management of wealth. They balance control and flexibility, helping families maintain stewardship and protection without exposing themselves to unnecessary risk.
Key scenarios where trusts add value
Succession of a family business
Family businesses often pose succession challenges. A trust structure can hold ownership shares while the business continues to be run by a founder or professional managers. The British Virgin Islands’ VISTA trust regime offers a compelling solution. It allows trustees to hold company shares without intervening in operations. This preserves founder control while preparing for a smooth transition of ownership to the next generation.
Support for minors or vulnerable beneficiaries
Trusts offer tailored solutions for families with young children, vulnerable adults or beneficiaries with special needs. Assets can be withheld until a beneficiary reaches a certain age or a milestone. Special needs trusts are designed to support a beneficiary’s lifetime care without affecting their eligibility for government assistance.
Managing international and multi-jurisdictional estates
With families spread across borders, dealing with multiple legal systems can be complex. Trusts simplify estate management by providing a single point of control. Trustees coordinate with advisers in each relevant jurisdiction to comply with reporting requirements, navigate inheritance rules and structure distributions efficiently.
Liquidity for legacy and tax needs
Estate taxes and legacy goals often require liquid funds. An ILIT ensures a tax-free payout on the death of the settlor, creating liquidity for estate duties or legacy bequests. Where estates include real estate or private company shares, a trust can be structured to sell or leverage these assets without delay, preserving stability and meeting obligations.
Balancing interests in blended families
In blended families, balancing competing interests can be complex. Trusts provide a framework that accommodates both the surviving spouse and children from previous relationships. For example, a trust may allocate income to a spouse for life, with the principal ultimately passing to children. This ensures each party’s interests are met fairly and clearly.
Asset protection from creditors
A properly established trust can protect assets from future claims by creditors, especially where the settlor no longer retains direct control. While trusts cannot be used to evade existing debts, they may shield family wealth from future liabilities such as divorce settlements, litigation or business failures.
Each of these scenarios shows how trusts provide practical, adaptable solutions. Trustees work with legal and tax professionals to craft structures that reflect the specific needs of the family, the jurisdictions involved and long-term goals. When done properly, a trust becomes more than an estate tool. It becomes a lasting framework for managing family values, vision and wealth with clarity and care.
Frequently asked questions (FAQs)
What are the main benefits of using a trust for family wealth planning?
Trusts offer a powerful combination of control, protection, and continuity. Unlike outright gifts or basic estate plans, trusts allow the settlor to define detailed conditions for asset management and distribution, whether for education, health care, business continuity or intergenerational transfers. Trusts also help mitigate risks, such as creditor claims or family disputes, while preserving privacy and ensuring that succession occurs smoothly, often avoiding the delays and costs of probate. For UHNW families, they are essential for managing complex, cross-border estates and preserving long-term family values and objectives.
How do trusts compare to wills in succession planning?
A will is a foundational estate planning tool, but it only takes effect upon death and must go through probate, a public, often lengthy, and potentially contentious legal process. In contrast, a trust operates both during life and after death, offering immediate and ongoing asset management without court involvement. This is particularly advantageous in cases of incapacity, cross-border families, or when discretion and efficiency are priorities. Trusts also allow for conditional distributions, milestone-based provisions, and long-term stewardship, which are not possible with a traditional will alone.
Can a trust help if family members live in different countries?
Yes. Trusts are one of the most effective tools for families with members residing in multiple jurisdictions. They centralise control and reduce the administrative complexity of complying with differing inheritance, tax, and disclosure laws. Professional trustees, especially those operating in international finance centres like the Cayman Islands, British Virgin Islands or Cyprus, often work alongside legal and tax advisers in the US, UK, LATAM, and Asia to ensure global compliance while preserving the integrity and intentions of the family’s estate plan.
How can a trust protect assets from future claims?
When properly structured, trusts can insulate family wealth from certain future claims, such as creditor actions, litigation risks, and marital disputes. The effectiveness of this protection depends on the jurisdiction, the timing of the trust’s creation, and whether the trust was established in good faith and without fraudulent intent. In many cases, assets held in trust are not considered part of a beneficiary’s personal estate, which limits their exposure to external claims. However, trusts are not a shield for existing debts or unlawful asset transfers and must comply with legal standards to be effective.
What is the role of a trustee in managing family wealth?
The trustee is a fiduciary, legally obligated to act in the best interests of the beneficiaries and in accordance with the terms of the trust deed. This includes investing assets prudently, making informed distribution decisions, maintaining accurate records, ensuring legal and tax compliance, and preserving the settlor’s intent over time. For international trusts, the trustee often coordinates with accountants, tax professionals, and legal advisers across jurisdictions to navigate local laws, reporting requirements, and regulatory risks. A professional or corporate trustee brings the added benefit of continuity, governance, and expertise, particularly in the management of high-value or complex assets.
Are trusts suitable for young or vulnerable beneficiaries?
Absolutely. Trusts offer tailored structures to support beneficiaries who are minors, have special needs, or may lack financial maturity. Distributions can be postponed until a beneficiary reaches a specific age or achieves certain milestones, such as graduation or professional achievement. These features ensure that wealth is distributed responsibly and that the long-term needs of family members are met with care and foresight.
Why do ultra-high-net-worth families use jurisdictions such as Cayman or BVI for trusts?
Jurisdictions such as the Cayman Islands and the British Virgin Islands offer several advantages, including strong legal frameworks, tax neutrality, and enhanced confidentiality. These jurisdictions often do not impose income, capital gains, or inheritance taxes on trust structures, and they do not require trust deeds to be publicly filed, preserving confidentiality. They also offer specialised regimes such as the VISTA trust in the BVI, which allows trustees to hold shares in a company without active management, ideal for maintaining founder control in a family business. These features make offshore trusts attractive for international families managing significant wealth with cross-border complexities.
Can a trust be used to manage illiquid or complex assets?
Yes. Trusts are particularly well-suited for holding illiquid or non-traditional assets such as family businesses, real estate portfolios, art collections, and private equity interests. Trustees, especially those with investment expertise or access to fiduciary committees, can ensure that these assets are preserved, managed, and eventually transferred in accordance with the settlor’s wishes. In cases where liquidity is needed, such as paying estate taxes or supporting legacy planning—a trust can facilitate the orderly sale or leverage of assets to meet those needs without compromising long-term value.
Do I still need a trust if I already have life insurance and a will?
While life insurance and a will are vital components of any estate plan, they have limitations. A will is subject to probate, which is public and may delay asset transfers. Life insurance proceeds may be subject to estate taxes unless structured within an irrevocable life insurance trust (ILIT). A trust complements both by offering confidentiality and allowing greater control over how and when beneficiaries receive assets. For families with complex needs, international ties, or long-term legacy goals, a trust provides a far more robust and strategic estate planning solution.
