(Contents) Of an Offshore Discretionary Trust Deed

The Parties to the Deed
The first part of the deed would usually cover who the settlor and the trustees are. In some cases another party may be mentioned although this is not particularly common in trust deeds (but is very common in deeds of retirement and appointment).

The Recitals
This section will include wording to the effect that the settlor intends to create a trust and will often specify the overall purpose of the trust (which might be to benefit the settlor's family).

Definitions
Most deeds will contain a section which defines the meaning of terms which are included in the deed. For example, the term 'Beneficiaries' will be defined and an explanation given as to who (or what) will or can benefit. Other terms which are usually defined, and which the trustees should pay particular attention to include the 'Perpetuity' (Trust Duration) Period', and the 'Trust Fund'.

Provisions and Powers
The next section would usually contain details of how the trust property is to be held and distributed. In addition, the powers of the trustees would be included in this section. In this section it should clearly state that the trustees have discretionary powers and that the interests of the beneficiaries will also be of a discretionary nature.

Schedules
In an attempt to simplify trust deeds it is usual for a deed to contain schedules which are referred to in the deed. They are commonly used to list the beneficiaries or perhaps the trustee's powers.

Execution Page
Usually, although not always, the deed will be executed by the parties at the end of the document. All parties to the deed should sign or seal and their execution of the deed should be witnessed.

Trust Accounting Principles for Offshore Trusts

Purpose of Trust Accounts
In general terms, trust accounts serve the following purposes:

a) They provide trustees with the ability to check that the terms of the trust have been complied with;

b) They help to explain to beneficiaries how their entitlements have been calculated and also how the trust property has been accounted for;

c) They assist the trustees with the general management and control of the trust assets by recording the present state of affairs (which is particularly useful with regard to trust investments);

d) They enable the trustees to fulfil their statutory duty to keep adequate accounting records which most offshore centres impose;

e) They provide information which is required for taxation purposes. Although most offshore trusts are not taxed locally, beneficiaries who receive distributions from a trust may need to submit accounting information to their tax authorities.