The role and effect of an Executory Trust

One of the crucial parts of the Bourse Non-Dom Solution suite is the ability to settle, if required, assets into trust on an ‘executory’ basis. To effect this, the UK Deemed-Dom will simply need to complete (i) a Protected Trust Application Form (available on request from Bourse); and (ii) a Non-Dom Pre-Verification and Pre-Approval Form and then, once Bourse has completed its CDD checks, Bourse will confirm to the UK Deemed-Dom that the equitable interest in the asset(s) has been settled into a Protected Trust. This means that, whilst the assets will have been validly settled into trust and therefore alienated by the UK Deemed-Dom for UK tax purposes, legal title to the relevant assets will still need to be transferred to perfect the trustee’s title to the relevant assets but this can be done after the Protected Trust is settled.

Each Protected Trust will be subject to the terms of the Bourse Model Trust Deed, a copy of which can be provided on request from Bourse. It should be noted that the Bourse Model Trust Deed can be varied, subject always to Trustee consent, following the establishment of a Protected Trust.

Why should I use an Executory Trust?

The terms of establishment of the Protected Trust have been drafted to ensure that the Protected Trust is effective for the client as soon as Bourse Trust confirms acceptance of the assets and the trusteeship. If a ‘normal’ method of establishment is used to establish the trust, with the legal title to the assets needing to be transferred in advance of them being properly subject to the terms of the trust, the point at which the assets are definitively subject to the trust will only occur once the trustee is the legal owner of the assets and undertaking the transactions to effect this may take some time. For a comparison between establishing an Executory Trust and settlement of assets into an existing trust, see here.

Transferring legal title

The general method of transfer of legal title in certain assets is as follows:

• Cash. Where cash is held, the transfer will be effected by simple bank transfer but, in practice, the cash will not be able to be transferred until Bourse has set up a bank account to hold trust monies.
• Investment Accounts. Where the Non-Dom wishes to transfer legal title to an Investment Account to Bourse, the financial institution with whom the Investment Account is held will need to be contacted and will need to consent to the transfer. Whilst it is very unlikely that the financial institution will not consent, it is quite possible that the financial institution may require substantial due diligence on the Bourse Group and the trust itself as well as the completion and signing of additional forms. The same process will apply to the transfer of a Bank Account.
• Private Company Shares. Although the legal transfer of shares can normally be effected by way of stock transfer form, if the relevant company is administered by a professional services provider, the Bourse Group may need to provide substantial due diligence on itself and the Entity. Bourse is able to take on the administration of both Guernsey and BVI entities if required but there will be additional work needed if this is to be done.