Discretional Trusts

A popular vehicle in tax planning is the Discretionary trust, a standard form of deed which gives Trustees wide powers of administration of investment and particularly of appointment. Settlors can use the device of trust, inter alia, to protect capital from inheritance taxes and to avoid dissipation of assets by improvident heirs.

The income of a Trust created in Gibraltar or on behalf of a non-resident of Gibraltar is exempt from all Gibraltar taxation even if the trustees are resident in Gibraltar, provided that no Gibraltarian or local resident is a beneficiary of the trust and the income either arises outside Gibraltar or is otherwise exempt. Assets vested in such a trust are also exempt from estate duty.