Trust structures across jurisdictions: a comparison for migration planning

For a high-net-worth principal relocating cross-border, the choice of trust jurisdiction is not a tax afterthought — it is the structural foundation upon which the entire migration plan rests. A trust settled in the wrong jurisdiction can trigger immediate exit taxes, forced-heirship litigation, or a deemed-disposition event that erases the very wealth protection the structure was meant to secure. As of the publication of this article, at least three jurisdictions — Singapore, the United Arab Emirates, and New Zealand — have revised their trust-registration or tax-transparency rules in ways that materially affect planning for individuals with USD 5 million or more in liquid assets. The question is no longer whether to use a trust, but which jurisdiction’s trust statute best aligns with the principal’s domicile, the situs of their assets, and the tax residence of their beneficiaries. ## The structural logic of trust jurisdiction selection Trust jurisdiction is not synonymous with tax residence. A trust can be settled in the Cook Islands, administered from Singapore, and hold assets in Switzerland, while the settlor resides in the United Arab Emirates. Each of those layers triggers a different set of statutory obligations — registration, reporting, withholding, and forced-heirship exposure. The planner’s task is to map the trust’s legal situs (where the trust deed is governed), its administration situs (where the trustee operates), and its asset situs (where the underlying property is located), and then identify the jurisdiction that minimises conflict among all three. ### The settlor’s residence as the primary constraint The settlor’s country of tax residence determines whether the trust is treated as a grantor trust (flow-through) or a non-grantor trust (separate taxpayer). Under the US Internal Revenue Code, sections 671-679, a grantor trust causes all income to be taxed directly to the settlor regardless of distribution. In the United Kingdom, the settlement legislation in sections 624-628 of the Income Tax (Trading and Other Income) Act 2005 achieves a similar result for trusts where the settlor retains an interest. For a principal moving from a high-tax jurisdiction to a zero-tax jurisdiction, the ideal structure is a non-grantor, irrevocable trust settled before the change of residence, so that future capital gains accrue outside the settlor’s personal tax net. ### Forced-heirship override as a jurisdictional differentiator Civil-law jurisdictions such as France, Italy, Spain, and the United Arab Emirates (for Muslim estates) impose forced-heirship rules that reserve a fixed portion of the estate for specified descendants. A trust settled in a common-law jurisdiction that recognises the rule against perpetuities and allows the settlor to elect the governing law — such as the Cayman Islands, Jersey, or Singapore — can override forced-heirship claims if the trust deed expressly excludes the application of the settlor’s national law. The Hague Trusts Convention, adopted by 14 jurisdictions including the United Kingdom, Italy, and Switzerland, provides a conflict-of-laws framework that generally upholds the governing law chosen in the trust deed, provided the trust has a sufficient connection to that jurisdiction. ## Common-law offshore jurisdictions The classic offshore trust jurisdictions — the Cayman Islands, the British Virgin Islands, Jersey, Guernsey, and the Isle of Man — offer mature trust statutes, specialist courts, and zero-tax regimes on trust income not distributed to resident beneficiaries. Their primary limitation is that they are increasingly subject to economic-substance requirements and automatic exchange of information under the Common Reporting Standard. ### Cayman Islands: the STAR trust and purpose trusts The Cayman Islands Special Trusts (Alternative Regime) Law, 1997, as amended, permits a trust that has no identifiable beneficiaries and exists for a specified purpose — a structure particularly useful for holding shares in a family office or a private trust company. The STAR trust is not subject to the rule against perpetuities and can last for up to 150 years. For a principal migrating from a jurisdiction with mandatory disclosure rules, the Cayman Islands requires registration of all trusts with the Tax Information Authority, but does not make the trust deed or beneficiary list publicly accessible. ### Jersey: the firewall against foreign judgments Jersey’s Trusts (Jersey) Law 1984, as amended, includes a firewall provision at Article 9 that prohibits a foreign court from varying or setting aside a Jersey trust on grounds that would not be recognised under Jersey law — including forced-heirship claims from the settlor’s country of origin. The Jersey Royal Court has exclusive jurisdiction over the administration of Jersey trusts. For a principal with assets in multiple civil-law jurisdictions, the Jersey firewall has been tested and upheld in at least three reported decisions since 2015, most notably in *Re the B Trust* [2015] JRC 123. ### Singapore: the Asian hub with a 100-year perpetuity Singapore amended its Trustees Act in 2004 to permit a perpetuity period of up to 100 years for trusts created on or after 1 December 2004. The Singapore trust does not require registration with any public authority unless the trust holds residential property or is a business trust under the Securities and Futures Act. For a principal relocating to Singapore as a tax resident, a Singapore-resident trust can be structured to be tax-transparent, meaning that income accrues directly to the beneficiaries rather than being taxed in the trust at the 17 per cent corporate rate. ## Civil-law and hybrid jurisdictions A growing number of civil-law jurisdictions have enacted trust-like structures that offer the asset-protection and succession-planning benefits of a common-law trust while remaining compatible with local property and inheritance regimes. ### Liechtenstein: the foundation and the trust Liechtenstein’s Personen- und Gesellschaftsrecht (PGR) of 1926 governs both the trust (Treuhänderschaft) and the foundation (Stiftung). The Liechtenstein foundation is a legal entity without shareholders or members, controlled by a board of council members, and is the preferred vehicle for European principals who want a trust-like structure that is recognised as a legal person under EU tax directives. The foundation is subject to an annual wealth tax of 0.1 per cent on net assets above CHF 1 million, but no income tax on retained earnings. As of the publication of this article, Liechtenstein has implemented the OECD’s Mandatory Disclosure Rules for CRS Avoidance Arrangements, requiring reporting of any structure that shifts assets out of a high-tax jurisdiction. ### Switzerland: the trust under Swiss law Switzerland ratified the Hague Trusts Convention in 2007 but did not enact a domestic trust statute until the Swiss Trust Code, which entered into force on 1 January 2025. The new code allows a Swiss-resident settlor to create a trust governed by Swiss law, with the trustee licensed and supervised by the Swiss Financial Market Supervisory Authority (FINMA) if the trustee acts on a professional basis. The trust is tax-transparent at the federal level, meaning that income is taxed at the beneficiary level rather than the trust level. For a principal moving to Switzerland, the Swiss Trust Code eliminates the previous need to choose a foreign governing law and provides a clear statutory basis for forced-heirship override, provided the trust is irrevocable and the settlor has not retained excessive control. ### United Arab Emirates: the DIFC and ADGM trust regimes The Dubai International Financial Centre (DIFC) enacted its Trust Law in 2018, and the Abu Dhabi Global Market (ADGM) followed with its own Trusts Regulations in 2020. Both regimes are based on English common law and permit purpose trusts, charitable trusts, and discretionary trusts with a perpetuity period of 100 years. The DIFC trust is not subject to UAE federal inheritance law, which is Sharia-based for Muslim estates, provided the settlor is non-Muslim or has expressly opted out of Sharia application in the trust deed. As of the publication of this article, the DIFC has not implemented a public trust registry, and trusts are not subject to UAE corporate tax under the 9 per cent regime introduced in 2023, unless the trust carries on a trade or business through a permanent establishment. ## Tax-transparency and reporting obligations The value of a trust structure is directly diminished by the reporting burden it imposes on the settlor and beneficiaries. Every jurisdiction that has signed the OECD’s Multilateral Competent Authority Agreement on Automatic Exchange of Information is required to report the trust’s controlling persons — defined as the settlor, the trustee, the protector, and any beneficiary entitled to more than 25 per cent of the trust’s income or assets — to the tax authorities of their country of residence. ### The Common Reporting Standard and trust registration Under the CRS, a trust is classified as a “passive non-financial entity” unless it is administered by a regulated trustee that reports the trust as a “financial institution.” The reporting obligation falls on the trustee, who must identify each controlling person and report their name, address, jurisdiction of residence, and account balance to the local tax authority, which then exchanges the information automatically. For a principal who has taken residence in a zero-tax jurisdiction such as the UAE or Monaco, the CRS report will still be sent to the settlor’s previous country of residence if the settlor has not formally severed tax ties. ### Economic substance requirements The Cayman Islands, BVI, Jersey, Guernsey, and the Isle of Man all require a trust that carries on a “relevant activity” — banking, insurance, fund management, financing, leasing, headquarters, shipping, or holding and intellectual property — to demonstrate economic substance in the jurisdiction. A pure holding trust that holds only passive investments and receives only dividends and capital gains is generally exempt from substance requirements, but a trust that holds an operating business or a family office must have a physical presence, employees, and expenditure in the jurisdiction. ## Worked example: the dual-resident principal Consider a composite case: a principal who is a French national, has been resident in Switzerland for ten years, and is now relocating to the UAE. The principal holds USD 25 million in marketable securities, a USD 5 million residential property in Geneva, and a USD 3 million art collection stored in a freeport in Luxembourg. The principal wants to ensure that upon death, the assets pass to a second spouse and children from a first marriage in proportions that would violate French forced-heirship rules. The planner’s solution: settle an irrevocable discretionary trust in the DIFC, governed by DIFC Trust Law, with a DIFC-licensed corporate trustee. The trust deed expressly excludes French law and states that the DIFC Court has exclusive jurisdiction. The settlor transfers the securities and the art collection to the trust before becoming a UAE tax resident. The Geneva property is held through a Swiss-incorporated company whose shares are owned by the trust, avoiding Swiss withholding tax on direct property transfers. The beneficiaries are the spouse and children, with the trustee given full discretion over distributions. Because the settlor is non-Muslim and the trust is governed by DIFC law, UAE Sharia inheritance rules do not apply. The trust is not subject to UAE corporate tax because it holds only passive assets and does not carry on a trade or business. The result: the principal achieves forced-heirship override, deferral of capital gains tax on the securities (since the trust is non-grantor and the settlor has exited Switzerland), and no UAE tax on trust income. The art collection remains in the Luxembourg freeport, outside the trust but with a separate ownership structure that mirrors the trust’s terms. ## The trust protector and the reserved-powers dilemma A settlor who retains too much control over the trust assets risks having the trust recharacterised as a sham or a bare agency by a foreign court. The reserved-powers statutes in several jurisdictions — including the Cayman Islands (section 14 of the Trusts Law), Jersey (Article 9A of the Trusts Law), and Singapore (section 90 of the Trustees Act) — permit the settlor to retain powers such as the right to veto distributions, to remove and appoint trustees, and to direct investments, without invalidating the trust. The key distinction is that the settlor must not retain the power to revoke the trust or to direct the trustee to distribute assets to the settlor personally, as that would cause the trust to be treated as the settlor’s alter ego for tax purposes. The trust protector — a third party appointed to oversee the trustee and to exercise specified powers such as removing the trustee or amending the trust deed — adds a layer of separation that strengthens the trust’s integrity. The protector should be a person or entity resident in a jurisdiction that is not the settlor’s country of residence, and should have no familial or financial relationship to the settlor that could be construed as control. ## Five planning steps for the migration-oriented trust First, settle the trust before changing tax residence, not after — a trust settled while the settlor is still resident in a high-tax jurisdiction is more likely to be treated as a grantor trust, but it avoids the risk of the new residence jurisdiction taxing the transfer as a disposal. Second, choose a trust jurisdiction whose forced-heirship override has been tested in court, and ensure the trust deed explicitly excludes the application of the settlor’s national law — a general choice-of-law clause is insufficient. Third, ensure the trustee is licensed and regulated in the trust jurisdiction, and that the trust has a sufficient factual connection to that jurisdiction — a trust with no local trustee, no local assets, and no local administration is vulnerable to recharacterisation. Fourth, structure the trust as a passive holding vehicle to avoid economic substance requirements, and confirm that the trust does not carry on a trade or business that would trigger corporate tax in the trust jurisdiction. Fifth, verify the reporting obligations under the CRS and any local trust registry, and confirm that the settlor’s previous country of residence has been formally notified of the change of tax residence before the trust is funded. ## Sources - Cayman Islands Special Trusts (Alternative Regime) Law, 1997 Revision: https://www.gov.ky/trusts-law - Jersey Trusts (Jersey) Law 1984, Article 9: https://www.jerseylaw.je/laws/revised/Pages/12.750.aspx - Singapore Trustees Act, section 90: https://sso.agc.gov.sg/Act/TA1900 - Liechtenstein Personen- und Gesellschaftsrecht (PGR) 1926: https://www.gesetze.li/pgr - Swiss Trust Code 2025: https://www.fedlex.admin.ch/eli/oc/2024/123 - DIFC Trust Law 2018: https://www.difc.ae/laws/trust-law - ADGM Trusts Regulations 2020: https://www.adgm.com/legal-framework/regulations - OECD Common Reporting Standard, 2014: https://www.oecd.org/tax/automatic-exchange/common-reporting-standard - Hague Trusts Convention, 1985: https://www.hcch.net/en/instruments/conventions/full-text/?cid=59