At Chambers Company Formation, we provide comprehensive trust services, including the creation, administration, and management of trusts, ensuring full compliance with Cyprus and international regulations. Whether you are looking to protect your wealth, plan your succession, or manage assets efficiently, our team of experts is ready to assist you.
Trust Creation & Trustee Services
Trust Creation & Trustee Services in Cyprus
Cyprus has established itself as a premier jurisdiction for trust formation and trustee services, offering robust legal protections, tax benefits, and confidentiality. With a long-standing tradition in trust law, Cyprus provides a secure and flexible framework for individuals, families, and businesses to structure and manage their assets effectively.
What is a Trust?
A trust is a legal arrangement where a settlor (the person creating the trust) transfers assets to a trustee, who holds and manages them for the benefit of the beneficiaries. The trustee has a fiduciary duty to act in the best interests of the beneficiaries according to the terms set out in the trust deed.
Key Components of a Trust:
✔ Settlor – The person who creates the trust and transfers assets.
✔ Trustee – The individual or entity responsible for managing the trust.
✔ Beneficiaries – The individuals or entities who benefit from the trust assets.
✔ Trust Deed – A legal document outlining the terms, conditions, and structure of the trust.
Main Trust Categories in Cyprus
Cyprus offers two primary categories of trusts:
1. Cyprus International Trusts (CITs)
Cyprus International Trusts (CITs) are highly popular among foreign investors, high-net-worth individuals, and businesses due to their strong asset protection and tax advantages.
Key Features of Cyprus International Trusts:
- Settlor & Beneficiaries: Neither the settlor nor the beneficiaries can be Cyprus residents in the year preceding the establishment of the trust.
- Trustee Requirement: At least one trustee must be a Cyprus resident.
- Asset Protection: Assets placed in a CIT are protected from creditors, provided they were transferred at least two years before any claim.
- Tax Benefits: No taxation on foreign-sourced income, dividends, or capital gains.
- Duration: A Cyprus International Trust can last indefinitely unless otherwise specified in the trust deed.
2. Local Cyprus Trusts (Resident Trusts)
Local trusts are available for Cyprus residents, serving as a means of estate planning, asset management, and wealth protection. These trusts operate under Cyprus trust law and must comply with local tax regulations.
Key Features of Local Cyprus Trusts:
- Available to Cyprus residents (settlors and beneficiaries).
- Governed by The Trustees Law of Cyprus, Cap. 193.
- Can be used for inheritance planning, family wealth preservation, or business succession.
- Subject to local tax obligations depending on the structure.
Types of Trusts Based on Structure & Purpose
Cyprus recognises eight main types of trusts, each tailored to meet specific legal, financial, and estate planning needs.
1. Revocable vs. Irrevocable Trusts
Revocable Trust (Living Trust)
✔ The settlor retains control and can modify or revoke the trust at any time.
✔ Used for estate planning, allowing assets to be transferred without probate.
✔ Assets in the trust remain part of the settlor’s estate for tax purposes.
Irrevocable Trust
✔ Once created, the trust cannot be modified or revoked by the settlor.
✔ Offers strong asset protection against creditors and legal claims.
✔ May provide tax benefits by removing assets from the settlor’s taxable estate.
2. Domestic vs. International Trusts
Domestic Trust
✔ Established under the laws of the settlor’s home country.
✔ Follows local tax, legal, and inheritance regulations.
✔ May be subject to local government scrutiny and estate taxes.
International Trust (Offshore Trust)
✔ Established in a foreign jurisdiction, such as Cyprus International Trusts (CITs).
✔ Offers asset protection, tax efficiency, and confidentiality.
✔ Can be used for estate planning, wealth management, and business structuring.
3. Fixed vs. Discretionary Trusts
Fixed Trust
✔ The trust deed defines the exact distribution of assets among beneficiaries.
✔ The trustee must follow the terms outlined in the trust.
✔ Suitable for structured inheritance planning and avoiding disputes.
Discretionary Trust
✔ The trustee has full discretion over how assets are distributed.
✔ Beneficiaries have no fixed entitlement to trust assets.
✔ Commonly used for wealth management and asset protection.
4. Private vs. Charitable Trusts
Private Trust
✔ Created for the benefit of specific individuals or families.
✔ Used for inheritance, tax planning, and wealth preservation.
✔ Commonly structured as revocable, irrevocable, discretionary, or fixed trusts.
Charitable Trust
✔ Established for public benefit, such as education, healthcare, or social causes.
✔ Often provides tax exemptions and can receive public donations.
✔ Governed by charity laws to ensure funds are used for philanthropic purposes.
5. Asset Protection vs. Estate Planning
Asset Protection Trust
✔ Designed to safeguard assets from creditors, lawsuits, or financial instability.
✔ Often structured as an irrevocable trust to prevent legal claims.
✔ Used by high-net-worth individuals, business owners, and professionals.
Estate Planning Trust
✔ Ensures wealth is transferred smoothly to heirs or beneficiaries.
✔ Can be revocable or irrevocable depending on inheritance goals.
✔ Helps reduce estate taxes and avoid probate.
6. Testamentary vs. Living Trusts
Testamentary Trust
✔ Created through a will and becomes active after the settlor’s death.
✔ Used to distribute assets gradually to minor children or heirs.
✔ Does not avoid probate, as it takes effect posthumously.
Living Trust (Inter Vivos Trust)
✔ Established during the settlor’s lifetime.
✔ Avoids probate and ensures seamless asset transfer.
✔ Can be revocable or irrevocable based on settlor preference.
7. Special Purpose Trusts
Spendthrift Trust
✔ Protects beneficiaries from wasting their inheritance.
✔ Trustees control how and when distributions are made.
✔ Commonly used for young, financially irresponsible, or incapacitated beneficiaries.
Purpose Trust
✔ Established for specific non-charitable purposes, such as managing corporate shares.
✔ Used in offshore jurisdictions like Cyprus for structured wealth management.
✔ Does not have direct beneficiaries but serves a legally recognised purpose.
Dynasty Trust
✔ Designed to preserve family wealth for multiple generations.
✔ Can last indefinitely, depending on the jurisdiction’s legal rules.
✔ Helps minimise estate taxes over successive generations.
8. Business-Related Trusts
Employee Benefit Trust
✔ Holds assets for employees’ benefits, such as pension schemes.
✔ Helps companies provide tax-efficient compensation plans.
✔ Used for stock option plans, bonuses, and retirement funds.
Unit Trust
✔ Common in investment and asset management structures.
✔ Trustees hold assets on behalf of investors, who receive units based on contributions.
✔ Often used in real estate investment and fund management.
Trust Creation
Why Do You Need a Custom Trust Deed?
The Trust Deed is the foundational document of a trust, defining the roles, rights, and responsibilities of the trustee and beneficiaries. A well-drafted Trust Deed ensures clarity, legal compliance, and proper asset management.
Our Trust Drafting Services:
✔ Tailored Trust Deeds designed to meet individual and corporate needs.
✔ Compliance with Cyprus & International Regulations, ensuring legal protection.
✔ Flexibility to adapt to changing circumstances and financial goals.
✔ Asset Protection & Wealth Management structuring for long-term security.
Common Uses of Trusts:
- Succession planning & inheritance structuring.
- Tax-efficient wealth management.
- Asset protection against future legal claims.
- Charitable donations & philanthropic causes.
- Providing financial security for minors, incapacitated individuals, or vulnerable persons.
Custom Trust Deed Drafting
Professional Trustee Services
As professional trustees, we manage and safeguard trust assets, ensuring that they are handled ethically and in the best interests of the beneficiaries.
Our Trustee Services Include:
✔ Ongoing trust management & administration.
✔ Compliance with legal & tax obligations in Cyprus.
✔ Regular monitoring & reporting of trust assets.
✔ Wealth distribution & financial planning for beneficiaries.
✔ Liaising with banks, investment advisors & legal professionals.
We work with a team of international experts, ensuring a holistic and strategic approach in managing your trust assets.
Protector Appointment Services
A Protector is an independent third party appointed to oversee the trustee and ensure that the trustee acts in accordance with the settlor’s intentions.
Why Appoint a Protector?
✔ Adds a layer of security to ensure trustee compliance.
✔ Can intervene in trustee decisions if necessary.
✔ Protects beneficiaries from potential trust mismanagement.
✔ Provides continuity and stability for long-term trusts.
We offer professional Protector services, ensuring independence, expertise, and unbiased decision-making.
Trust Compliance & Registration
Trust Registration with CySEC
In Cyprus, express trusts must be registered with the Cyprus Securities and Exchange Commission (CySEC) under the Trusts and Beneficial Owners Register. Unlike company registers, this register is not publicly accessible, ensuring confidentiality.
Who has access to Trust Registration information?
- Cyprus regulatory authorities (CySEC, Tax Department, Police).
- Entities conducting due diligence (e.g., banks, financial institutions).
- Legal persons who can demonstrate a legitimate interest.
Trust Advisory & Legal Support
The establishment, administration, and restructuring of a trust require legal and financial expertise. Our team of lawyers and tax advisors provides comprehensive trust advisory services, covering:
✔ Tax efficiency & compliance strategies for Cyprus trusts.
✔ Succession planning & asset transfer guidance.
✔ Structuring international holding companies through trusts.
✔ Resolving trust disputes & legal challenges.
✔ Advising on cross-border legal matters affecting trust administration.
Why Choose Chambers Company Formation for Trust Services in Cyprus?
✔ Decades of Experience in trust law and asset protection.
✔ Expertise in International Trust Structuring.
✔ Full Legal & Tax Compliance with Cyprus & EU laws.
✔ Confidential & Secure Trust Management.
✔ Bespoke Solutions Tailored to Your Needs.
Whether you need a trust for estate planning, wealth protection, or corporate structuring, our experts will provide trusted guidance and professional administration.
Get Expert Trust Advice Today
Contact us today to discuss how we can assist with trust creation, trustee services, or asset protection in Cyprus. Our team is ready to provide strategic solutions tailored to your needs.