Trusts & Foundations

Trusts and foundations are the two principal tools for separating the legal ownership of assets from the people who ultimately benefit from them. They sit at the heart of serious wealth planning because they answer questions a company cannot: who controls this wealth after I am gone, how is it protected from claims, and how is it passed on without dispute or unnecessary tax.

A trust is a relationship, not an entity. A settlor transfers assets to a trustee, who holds and manages them under a trust deed for the benefit of named or discretionary beneficiaries. A foundation, by contrast, is a legal entity in its own right, more familiar to civil-law clients, that owns its assets directly and is run by a council according to its charter. Both achieve similar ends; which fits depends on the client's background, the assets and the jurisdictions involved.

People reach for these structures for succession, asset protection, philanthropy, holding family businesses across generations, and confidentiality. As at 2026, with beneficial-ownership transparency rising and forced-heirship and family-law claims increasingly cross-border, the value of a properly constituted trust or foundation is less about secrecy and more about certainty, governance and continuity.

Choosing the right jurisdiction

The choice of jurisdiction shapes how strong the protection is, how the structure is recognised abroad, and how credible it looks to courts and banks. Here is how we typically compare the leading options.

Cook Islands. The benchmark for asset protection. Its legislation makes it extremely hard for foreign creditors to reach trust assets, with short limitation periods and a high burden of proof on claimants. Best for clients with genuine, lawful exposure to litigation, set up well before any claim arises. Weakness: cost, and the reputational questions a heavily protective structure can raise with conservative banks.

Nevis. Similar protective philosophy to the Cook Islands, often at lower cost, and strong for both trusts and LLCs used as protective layers. Good value for asset protection. Same caveat on reputation and on the need to establish it early, never reactively.

Jersey (and Guernsey). The gold standard for credibility and substance. Mature, well-regulated, respected by every major bank, with a deep professional ecosystem and sophisticated courts. Best for large, long-term family structures where reputation and bankability matter more than maximum protection. More expensive and less aggressively protective than the Pacific options.

Cayman Islands. Strong for trusts holding investment assets and for the STAR trust, which permits purpose trusts and flexible enforcer arrangements. Excellent institutional acceptance. Best where the trust interacts with funds or commercial structures.

Panama and Nevis foundations. For clients from a civil-law background who find the trust concept unnatural, a private foundation owns its assets directly and is governed by a charter and council. Useful for philanthropy, for holding a family company, and for clients in jurisdictions that do not recognise trusts well. Panama foundations are long-established and cost-effective; substance and proper administration still matter.

The structures themselves also vary, and matching the type to the purpose matters as much as the country.

• Discretionary trust. The trustee decides which beneficiaries receive what and when. Maximum flexibility and the strongest protection, because no beneficiary has a fixed entitlement to attack.
• Fixed-interest trust. Beneficiaries have defined shares. Simpler and more certain, but less protective and less flexible.
• Purpose trust. Holds assets for a stated purpose rather than for people, useful in commercial structures and certain holding arrangements.
• Reserved-power trust. Lets the settlor retain specified powers, such as over investments, giving comfort to those reluctant to let go entirely. Reserve too much and you risk the trust being treated as a sham.

How it works in practice

• Define the purpose. Succession, protection, philanthropy or business continuity. The purpose drives every later choice. A trust built for the wrong reason is worse than none.
• Select structure and jurisdiction. The type of trust or a foundation, and the country, chosen against that purpose and the client's home-country rules.
• Choose the trustee or council. A licensed professional trustee is almost always preferable to a friend or relative; this is the most consequential decision in the whole exercise.
• Draft the instrument. The trust deed or foundation charter, the letter of wishes guiding the trustee, and any protector or enforcer role.
• Settle the assets. Transferring property in properly, with clean source-of-funds records, and respecting the formalities. A sloppy transfer undermines the whole structure.
• Administer it. Ongoing trustee decisions, accounts, distributions and reviews. A trust is administered for decades, not signed once.

What goes wrong

• Set up too late. Creating a protective trust after a claim is on the horizon invites a fraudulent-transfer challenge. Protection rewards those who plan early.
• The sham trap. A settlor who keeps real control, dictating every decision and treating trust assets as personal, risks a court finding the trust a sham and ignoring it entirely. Letting go is the point.
• Letter of wishes treated as binding. It guides the trustee; it does not command them. Clients who misunderstand this feel betrayed when a trustee exercises genuine discretion.
• Home-country blind spots. A structure that works beautifully offshore can trigger punitive anti-avoidance, reporting or tax rules in the settlor's or beneficiaries' country. Trusts must be tested against home-country law, not just the trust jurisdiction.
• Wrong trustee. An amateur or conflicted trustee causes more failures than any drafting flaw. Disputes, paralysis and liability follow.
• Confusing privacy with concealment. These structures are for legitimate confidentiality and governance, not for hiding reportable assets. The latter ends badly.

How HPT helps

A director leads every trust and foundation engagement, because these are among the most consequential and long-lived structures a family will ever put in place. We begin with the purpose and the family, not with a product.

We provide a written structuring memo: the recommended structure and jurisdiction, the rationale, the alternatives considered, the home-country issues to take to your tax counsel, and the realistic cost over time. We help draft the deed or charter, the letter of wishes and any protector arrangements, and we coordinate licensed, regulated trustees and foundation councils rather than acting in roles we are not the right party to hold.

We are candid about fit. For some families a simple will and good company structure does the job, and a trust would be expensive theatre. Where a trust or foundation is genuinely the right answer, we make sure it is built early, built properly, and built to survive scrutiny.