Trusts are either revocable or irrevocable. The trust instrument is usually signed and sealed by both the settlor and the trustees. The choice of trustees is very important as the trustees are under a strict legal obligation to carry out the precise terms of the trust.
Trustees can either be individuals or companies or even a combination of the two.
The trust fund can consist of a variety of assets including cash, company stocks, businesses, investments, property, homes, insurance policies or interests in other trusts. This is a very flexible trust and gives a high level of confidentiality as usually there is no requirement to file the trust instrument with any government agency so that privacy of the settlor, the trust's activities and the identity of the beneficiaries is fully protected. Typically, the trust is created in a country which imposes no tax of any kind on the settlor, the beneficiaries or in the income or capital gains earned by the trust. Further, more jurisdictions selected for forming offshore trusts do not have any requirement for the trustees to file trust accounts with the local tax authority - thus further preserving the confidentiality of the trust's activities. Depending upon the residence for tax purposes of the settlor and the beneficiaries, it is often possible to make distributions of capital or income from the trust completely free of tax.