Trusts remain one of the most powerful instruments in international wealth management, yet they are also among the most technically demanding. Over the last decade, the global regulatory landscape has become more rigorous, with requirements around transparency, fiduciary conduct, reporting, and digital asset management evolving faster than at any time in modern trust practice.
This article provides a current, high-accuracy overview of the trust framework as it operates across leading jurisdictions, drawing on principles from common law equity, statutory regimes such as the Jersey Trusts Law 1984, Cayman Islands Trusts Act, Guernsey Trusts Law 2007, Singapore Trusts Act, and global compliance instruments including the FATF Recommendations (2023 Update) and the OECD CRS framework.
The goal is to outline not just what trusts are, but what they must look like today to withstand regulatory review, cross-border litigation, and evolving asset classes.
The Legal Character of a Trust: A Split in Ownership, Not a Legal Entity
A trust is not a company, partnership, or foundation. It is a legal relationship created when:
A settlor transfers assets to
A trustee, who holds legal title,
For the benefit of beneficiaries,
Pursuant to a trust deed that sets out rights, duties, and governance.
This separation of legal and beneficial ownership is what allows trusts to perform functions that other structures cannot, such as:
Ring-fencing assets from personal or commercial liabilities
Managing wealth across multiple legal systems
Ensuring controlled succession independent of probate
Preserving family governance rules over several generations
Supporting philanthropic or purpose-driven objectives
The validity of this relationship rests on fiduciary obligations, which are among the strictest duties imposed under common law.
Fiduciary Duties: The Foundation of Modern Trust Governance
Trustees are not mere administrators. They are fiduciaries bound by obligations reinforced through centuries of case law and modern statutory provisions.
Core duties include:
Duty of Loyalty
The trustee must act solely in the interests of beneficiaries. Statutes such as Jersey Trusts Law Article 21 and Cayman Trusts Act Section 24 codify and reinforce this principle.
Duty of Prudence and Care
Trustees must manage assets with the care of a professional prudent investor. This duty has expanded significantly with the rise of digital assets, requiring risk frameworks, valuation methodologies, and custody protocols.
Duty to Avoid Conflicts
Any self-dealing or undisclosed conflict may render decisions voidable.
Duty to Maintain Records and Transparency
Under FATF Recommendation 25, trustees must maintain verified information on beneficial ownership, powers, and all trust-related transactions.
CRS obligations require accurate fiscal residency information and reporting by trustees classified as reporting financial institutions.
These duties are not optional; they are tested during regulatory reviews, audits, disputes, and cross-border asset tracing.
Trust Types and Their Strategic Use in 2025
Discretionary Trusts
The trustee has discretion over distributions, providing maximum asset protection and flexibility—particularly useful for founders, expatriates, and families with beneficiaries in multiple jurisdictions.
Fixed or Interest-in-Possession Trusts
Beneficiaries have predetermined rights. Suitable for stable income planning or when transparency around entitlement is required.
Purpose Trusts
Used for holding shares in underlying companies, IP portfolios, digital assets, aircraft, yachts, or for philanthropic missions.
Cayman’s STAR regime and Bermuda’s Purpose Trusts Act are leading examples.Reserved Powers Trusts
Allow the settlor to retain defined powers (investment decisions, appointment/removal rights).
Jurisdictions such as Jersey and the Cayman Islands have explicit statutory carve-outs to prevent challenges to validity so long as powers are properly structured.
This is often the preferred model for entrepreneurs who want protection without losing all strategic influence.
Key Considerations When Structuring an International Trust
1. Jurisdiction Selection
The strength of a trust depends on its governing law. When selecting a jurisdiction, clients should evaluate:
The presence of firewall provisions protecting trusts from foreign judgments
Court expertise in trust litigation
Trustee licensing and supervision regimes
Political and judicial stability
Compatibility with cross-border tax reporting
Leading jurisdictions (Jersey, Guernsey, Cayman, Bermuda, Singapore) invest heavily in trust law reform to maintain predictability and creditor protection.
2. Asset Class and Custody Requirements
Modern trusts must handle asset categories not contemplated in traditional drafting:
Operating business equity
Intellectual property (trademarks, patents, code repositories)
Digital assets, cryptocurrencies, tokens
Portfolio investments across multiple exchanges
High-value real estate
Art, luxury assets, and specialised investments
Each of these requires specific governance, valuation, and custody mechanisms.
For example, digital assets must comply with FATF’s Travel Rule, wallet custody rules, and chain-of-title documentation.
3. Control Mechanisms and Settlor Intent
Key governance features include:
Protector powers (appointment, removal, veto rights)
Reserved powers (investment decisions, voting shares)
Distribution guidelines and family governance rules
Pre-defined crisis or succession triggers
However, control must be calibrated. Excessive settlor involvement risks undermining the trust’s independence and legitimacy, particularly in disputes or insolvency proceedings.
4. Compliance Framework & Documentation
Trustees must maintain:
Detailed due-diligence files under AML/CFT standards
CRS classifications and reporting frameworks
Beneficial ownership registers (where required)
Written investment policies
Minutes, accounting records, and documented decision-making trails
Regulators increasingly expect trust service providers to demonstrate substance, not merely hold documents.
Why Trusts Matter Now More Than Ever
Global families and founders face:
Conflicting succession laws
Aggressive creditor environments
Joint-venture risks
Multiple tax regimes
Digital asset vulnerabilities
Volatile geopolitical landscapes
A properly structured trust remains one of the most effective tools for ensuring continuity across borders, across generations, and across asset classes.
Lexonix Advisory
Lexonix supports private clients, founders, and cross-border businesses in:
Designing modern trust structures aligned with international best practice
Selecting appropriate governing law and trustee jurisdictions
Integrating digital assets, IP, and operating companies
Building long-term governance frameworks and resilience mechanisms
Ensuring FATF-aligned compliance, transparency, and recordkeeping