Wealth Solutions fact sheet
Reserved Power Trust
A trust is a legal arrangement
allowing a person (“the settlor”) to
transfer assets to a third party (“the
trustee”) to be administered for the
benefit of those chosen by the settlor
(“the beneficiaries”). The trust is
administered in accordance with the
terms set out in the trust instrument.
Reserved Power Trust
One of the most common type of trust
is a discretionary one, in which the
trustees have full control and
management of the assets and their eventual distribution. While this type of trust
does offer many benefits, at EFG we know how important it is for solutions to be
crafted in accordance with client needs.
Key features
With a Reserved Power Trust, the settlor can retain one or more powers in relation to
the trust, or have them held by a third party, without affecting the validity of the
structure.
Under a number of international trust laws settlors, or a third party nominated by them,
(“the power holder”) may generally reserve any or all of the following powers (although it
is not recommended that too many powers are retained):
 Revoke, vary or amend the trust instrument in whole or in part.
 Appoint either income or capital of the trust property.
 Retain any limited beneficial interest in the trust property.
 Act as a director or officer of any company wholly or partly owned by the trust.
 Give binding directions to the trustee in connection with the purchase, holding or
sale of the trust property.
 Appoint, add or remove any trustee, protector or beneficiary.
 Change the governing law and the forum for administration of the trust. or
 Restrict the exercise of any powers or discretions of the trustee by requiring that
they shall only be exercisable with the consent of the settlor (or any other specified
person).
Advantages
Reserved Power Trusts are particularly appropriate where the settlor would wish the
trustees to invest in non-professionally managed assets, such as execution-only trades
or in non-diversified assets, such as single lines of stock.
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Retaining investment powers can also be advantageous where the settlor or nominated
power holder is an experienced investor.
A settlor may wish to continue acting as a director of an investment or holding company
which is being placed into trust. Generally, the trustees would prefer to take over as
directors.
However, under directions given by the power holder, the trustee would be in a position
to take over ownership of the company in question but not be responsible for the
management of the corporate vehicle.
Reserving administration powers gives the power holder flexibility in controlling the
dispositive provisions of the trust according to changing circumstances including the
ability to add or remove beneficiaries.
The settlor may also retain the power to remove the trustee and appoint new trustees in
the event of a dispute, without having to revert to statutory provisions.
Reserved Power Trust
Risks
Onshore legal and tax rules may limit the nature and extent of
the powers that can be reserved by a settlor before they
compromise or negate the advantages of a Reserved Power
Trust. It may be more appropriate for a family advisor to hold the
reserved power. As such it is important to obtain professional
onshore tax, legal and risk mitigation advice before the trust is
established to ensure it achieves its desired objectives.
Let’s start a conversation
EFG Wealth Solutions provides fiduciary, corporate, fund administration, custodian and
depositary services to high net worth individuals, corporate and institutional clients. It is
part of EFG International, a global private banking group active in around 30 locations
worldwide. EFG provides a range of solutions encompassing banking, credit, wealth
structuring and investments.
Start a conversation with us today to find out how you can benefit from a relationship
with EFG. Please get in touch with your usual contact at EFG Wealth Solutions or:
Julie Collins, Head of Business Development
T: + 44 1534 605 690
E: julie.collins@efgwealthsolutions.com
www.efginternational.com
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Important Information
EFG Wealth Solutions believe that the information in this publication is accurate. However, it is unavoidably general in
content and should not be relied upon in making a specific decision. EFG and its affiliates do not provide advice,
recommendations or opinions regarding legal and/or tax matters under any circumstances. To the extent that this
communication, anything referenced herein, or any items attached hereto may concern tax matters, they are not intended to
be used, and cannot be used, for the purpose of avoiding tax liabilities or penalties that may be imposed by law, foreign and
domestic. EFG Wealth Solutions strongly recommend that before making a decision to create a structure, clients should take
professional legal and tax advice in their country of residence. EFG Wealth Solutions is part of EFG International and
includes the following: EFG Wealth Solutions (Jersey) Limited and its Jersey subsidiaries regulated by the Jersey Financial
Services Commission; EFG Fund Services, a division of EFG Wealth Solutions; EFG Wealth Solutions (Singapore) Limited
regulated by the Monetary Authority of Singapore; EFG Bank & Trust (Bahamas) Ltd regulated by the Central Bank of The
Bahamas; EFG Wealth Management, (Cayman) Ltd and EFG Investment Services (Cayman) Ltd regulated by the Cayman
Islands Monetary Authority; EFG Bank (Luxembourg) S.A. regulated by the Commission de Surveillance du Secteur
Financier; EFG Private Bank (Channel Islands) Limited regulated by the Guernsey Financial Services Commission; and EFG
Investment Services, Inc. incorporated in the United States of America. Issued by EFG Wealth Solutions (Jersey) Limited,
P O Box 641, No 1 Seaton Place, St Helier, Jersey JE4 8YJ Channel Islands.
Publication date: July 2015