Cyprus Trusts

March 2018

www.pwc.com.cy

Trusts and Succession Planning

Trusts provide an attractive alternative estate and succession planning tool.

Trusts under Cyprus Law

A trust may be defined as an obligation under which a person to whom property is transferred (i.e. the Trustee) is bound to deal with the beneficial interest in such property in a particular manner in favour of a specified person or persons or class of persons (i.e. the Beneficiaries).

As a general rule every person who is able to acquire and dispose of property is able to create a trust. Exceptions to this rule exist in the case of minors, the mentally impaired and bankrupts.

Three categories of persons are concerned in a trust, namely,

Trusts are a concept familiar to Common Law Jurisdictions. They originated in England more than 1.000 years ago and developed ever since. They are based on Equity principles and around the unique characteristic of ownership under these principles. Namely, that ownership may be split into two constituent parts. Legal ownership, which has to do more with formalities, i.e. who is the registered owner, and beneficial ownership, which has to do more with rights i.e. who is the real owner.

The main legal framework governing local trusts in Cyprus is a combination of English Law and Statute Law namely the Trustees Law of Cyprus (Cap 193), which is modelled on the English Trustee Act of 1925.

1. the Settlor i.e. creator of the trust; 2. the Trustee i.e. the person (company or individual(s)) to whom the property is

transferred to deal with it as directed in the trust deed or by the Settlor; and3. the Beneficiary(ies) i.e. the person(s) in whose favour the trust has been

created/ the persons who have rights in respect of the trust property.

Uses of Trusts for Succession Planning

Trusts are widely employed in what may be loosely termed ‘family situations’ and for charitable purposes. For example a trust under Cyprus Law may be created:

• for succession planning

• to hold property for minors or successive generations of a family

• to protect property against spendthrift people

• to provide secretly for others

• to provide for a couple on their marriage whilst ensuring that the property so provided is ‘tied up’ in the event of that marriage failing

• to establish a fund for the benefit of family members according to future needs as and when they arise

• to enable charitable objects to be carried out

• We advise clients about the creation of trusts under Cyprus Law, including proposing structure ideas for creating, managing and dissolving trusts and draft all required legal documents

• We support and assist clients in terms of logistics when creating a trust under Cyprus Law

• We set up private trustee companies (PTCs)

• We advise clients and trustees about issues arising in relation to trusts under Cyprus Law, trustee powers, beneficiary rights, interpretation of trust deeds and other trust related documentation

• We represent clients and trustees in court proceedings (contentious or not contentious)

• We advise clients on the potential weaknesses and deficiencies of existing trusts

• We provide trustee, administration, management and other related services

Our services

Contact us:

Theo C ParperisPartner, Head of Tax & Legal theo.parperis@cy.pwc.com

PricewaterhouseCoopers Ltd

PwC Central, 43 Demostheni Severi Avenue,CY-1080 NicosiaP O Box 21612, CY-1591 Nicosia, CyprusT: +357-22 555 000, F: +357-22 555 001

City House, 6 Karaiskakis Street, CY-3032 Limassol, CyprusP O Box 53034, CY-3300 Limassol, CyprusT: +357 25-555 000, F: +357-25 555 001

Nicos P ChimaridesPartner, In charge of International Private Clients nicos.chimarides@cy.pwc.com

Spyros A EvangelouPartner, In charge of Legal AdvisoryS.A. Evangelou & Co LLCspyros.evangelou@cy.pwclegal.com

This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.

© 2018 PricewaterhouseCoopers Ltd. All rights reserved. PwC refers to the Cyprus member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.