Offshore trusts: fact or fiction

[CEO]

Hello

The title says everything.

I am sick of fake influencers sharing nonsense crap general tips just for selling courses or consulting telling people you are safe and protected from any gov around the world especially USA 😂, if you don't mind guys share your opinions.

Happy weekend

Cheers

 

[JohnnyDoe]

Influencers didn't go to law school. Their first interaction with the law is usually when they are charged with tax evasion.

A trust only works when it’s real, which means that the settlor must really renounce control. If you still sign instructions, move funds, or “approve” the trustee decisions, you’ve created what the courts call a sham trust: ownership in disguise.

"Equity looks to intent, not form", says the old maxim.

A trust requires the “three certainties” set out in Knight v. Knight (1840):

1. certainty of intention
2. subject matter
3. objects.

If intention is missing because the settlor secretly keeps control, there’s no trust at all.

Common law courts are ruthless on this point. In Snook v. London & West Riding Investments Ltd [1967] 2 QB 786, Lord Diplock described a sham as an act “intended to give to third parties the appearance of creating legal rights and obligations different from the actual legal rights and obligations intended.”
The same reasoning applies to trusts: substance over appearance.

In Midland Bank v. Wyatt [1995] 1 FLR 697, a husband “settled” his property in trust for his wife and child but continued to act as the owner. The court struck it down: it was a façade to protect assets, not a genuine transfer.

The principle extends to modern offshore law. For example, Jersey (Art. 11, Trusts (Jersey) Law 1984) and the Cayman Islands (Trusts Act, s.8) require that a trust be constituted by a real transfer of property to a trustee with enforceable fiduciary duties. Retained powers may exist, but if they effectively let the settlor dictate outcomes, the arrangement collapses.

In short:

Control retained = sham
Intention genuine + property transferred = valid trust

A real trust does what its deed says: separates ownership, benefit, and control. Everything else is only good for TikTok.

 

[Marty McFly]

What about foundations?

 

[JohnnyDoe]

A foundation is the civil law cousin of the trust: same family, different personality. Both are vehicles for separating control, ownership, and benefit, but they come from two opposite legal worlds.

Origin and Nature​

A trust is born from equity, not statute. It exists because courts of chancery decided, centuries ago, that conscience should bind the holder of property to honor another’s beneficial interest. “Equity regards as done that which ought to be done.” (Maxim of Equity.) So the trustee holds legal title, but not beneficial ownership.

A foundation, on the other hand, comes from civil law, especially Roman and Napoleonic traditions. It’s a legal person, like a company, created by a founder through a charter or deed. The assets belong to the foundation itself, not to the founder, not to the beneficiaries. The council or board manages the assets according to the charter, under supervision by a regulator or foundation council.

Core Differences​

Aspect	Trust (Common Law)	Foundation (Civil Law)
Legal personality	No. The trust is a relationship, not an entity.	Yes. The foundation is a separate legal person.
Ownership of assets	Trustee holds legal title for beneficiaries.	Foundation owns assets in its own name.
Control	Settlor must relinquish control; trustee owes fiduciary duties (see Knight v. Knight, Snook v. LWR).	Founder may retain certain reserved powers within the charter or council structure.
Governing law	Equity and precedent (e.g. Trusts (Jersey) Law 1984; Trustee Act 2000 UK).	Civil codes or dedicated laws (e.g. Liechtenstein Persons and Companies Act; Panama Private Interest Foundation Law 1995).
Supervision	Private relationship; minimal registration.	Often registered with public authority; sometimes subject to audit or oversight.
Principle	Equity will not perfect an imperfect gift.	Form gives existence; statute defines capacity.

Jurisdictional Differences​

In common law jurisdictions (England, Cayman, Jersey, BVI etc.), trusts dominate. Courts look for the settlor’s intention and for genuine transfer of control. The moment you dictate terms beyond what equity tolerates, the trust fails.
In civil law jurisdictions (Switzerland, Liechtenstein, Panama, Italy...), foundations are favored. Judges there are allergic to the concept of “split ownership”, which doesn’t exist in their system. They prefer an entity with legal personality that owns its assets outright and acts according to a written statute.

Summary​

A trust is a relationship of confidence; a foundation is a body corporate of purpose.

• The trust is rooted in conscience.
• The foundation is built on statute.

As the old equity maxim goes, “He who seeks equity must do equity”. A foundation, by contrast, doesn’t appeal to conscience at all, it relies on formal law: lex facit personam - the law creates the person.

For flexibility and discretion, use a trust. If you want structure, registration, and a civil law comfort blanket, use a foundation. Both work, if you actually respect their nature and don’t pretend one is the other.