Gibraltar is situated in a unique strategic location on the southern tip of the Iberian Peninsula, overlooking the Strait of Gibraltar. It has a long history as being an important world centre of trade and commerce, maintains an independent tax status and reflects a diversity of people and cultures that have all left their stamp on 'The Rock'

Gibraltar remained a Spanish possession until the early 18th Century when it fell to a combined Anglo-Dutch force. The Treaty of Utrecht of 1713 ceded the Rock to the 'Crown of Great Britain' in perpetuity.

Gibraltar's state-of-the-art digital/satellite communications technology is on a par with anywhere in the world. Plus, the national airport guarantees regular flights to and from the UK. Only one hour away in Spain one can make use of Málaga's International Airport.

Gibraltar is under UK rule with regards foreign policy and defence, as well as internal security. The Governor of Gibraltar is a representative of the Crown.

Gibraltar has laws, called 'ordinances' which are established by the democratically elected Gibraltar House of Assembly. However, the legal system is established according to UK common and statute law which is another reason why "we're as solid as a rock".

The steady growth of Gibraltar's financial sector reflects this sense of security.

We all know that it takes a jurisdiction time to develop its trust law. That's why the fact that Gibraltar is a UK jurisdiction means it is long-established, in terms of Trust law and civil law, thus guaranteeing a system based on solid experience and knowledge. The whole concept of a Trust is an Anglo-Saxon creation and one cannot underestimate theimportance of dealing in a jurisdiction which truly understands the concept.

The legal practitioners at Cruz & Co. have the expertise and experience to be able to fully advise on all vital issues relating to the establishing and administration of a Trust.

In contrast, if Trusts are established within a jurisdiction where the relevant concepts have not been tried and tested over a considerable period of time then, this can lead to uncertainty and possible legal dispute.

Gibraltar's legal professionals are UK qualified. However, there are differences. For example, there is no distinction between barristers and solicitors: both are called to the Bar in Gibraltar.

Nicholas Peter Cruz LLB, founder of Cruz & Co., is a barrister called to the bar of England and Wales and a member of Middle Temple, which is one of four Inns of Court to which every UK barrister must belong.

Trust law is, therefore, both recognised in Gibraltar as well as practised by fully qualified and versed legal professionals.

Notwithstanding, if there is any suspected miscarriage of justice or misunderstanding, then an appeal from the Gibraltar Supreme Court may be made to the UK judges sitting in the Gibraltar Court of Appeal. These are heard on a bi-annual basis. The Privy Council in London (the equivalent to the House of Lords) is the ultimate Court of Appeal for Gibraltar.

At Cruz & Co. we are totally bilingual in Spanish and English which is useful for many of our Spanish speaking clients. This places us at a considerable advantage when compared to other offshore jurisdictions that offer Trust facilities.

You can either select a person or a Trust corporation to act as your Trustee. With regard the former, at least two Trustees should be chosen to protect you in the event of death of one of the parties. This is why many people prefer the option of a Trust corporation.

Based on the 1893 UK's Trust law, Gibraltar's Trust legislation has the flexibility to take full advantage of any pertinent changes in both the UK and Gibraltar. This has resulted in certain amendments over the years ? to your advantage.

The statutory framework provided by the Gibraltar Trustee Ordinance established the duties and powers of the Trustees, while the actual Trust Deed assesses the nature and scope of the document. The Trustee Ordinance provides a vital legal backup to the actual Deed, which is particularly important, if there is any issue not covered in the Deed, for one reason or another.

In 1986, the Perpetuities and Accumulation Ordinance established the perpetuity period or duration of a trust could be as much as 100 years.

Although the 1925 UK Trustee Act has not been fully implemented in Gibraltar, amendments to local Trust laws have been made, which have resulted in more flexibility and a wider range of options for both beneficiaries and Trustees.

More specifically, the UK Variation of Trusts Act, 1958 is applied, where appropriate and, furthermore Gibraltar's Application of English Law Ordinance means that UK Acts and provisions may be applied in full where necessary.

However, in our experience, we have found that it is often more fitting to redraft provisions to suit our client's particular needs.

In 1961, the UK Trustee and Investment Act was established by the Trustee Investment Ordinance and the powers of delegation conferred on Trustees by both the UK Trustee Act of 1925 and the Powers of Attorney Act in 1971. Today, both are contained with the Trustee Ordinance.

In short, Gibraltar laws encompass the Anglo-Saxon Trust legislation, with appropriate amendments over the years which have benefited both beneficiaries and Trustees.

In our experience, the Discretionary Trust is the most popular among our clients as this guarantees total confidentiality and flexibility. Beneficiaries are specifically named, however their interest only becomes fixed and 'real' when the Trustees appoint a benefit to a beneficiary. This may be cash held in a bank account, property, shares or similar assets. In general, the Trustees adhere to the wishes of the client (settlor), as specified in the terms of the Trust in question. The client usually indicates his preference by completing a Memorandum of Wishes. This details how he/she desires the trustees to deal with the assets of the Trust, both during his/her lifetime and at the time of death.

Accumulation and Maintenance Trusts, as well as Life Interest Trusts are also available.

Sometimes it may be necessary to withdraw, exclude or add a beneficiary at any given time. This can refer to both individuals and class or classes of persons. In general, the Trustees retain this right, although the Trust may appoint a counsellor (protector) to execute the same if they see fit. The counsellor is normally a close friend, colleague or the personal lawyer of the client and may also be responsible for removing and appointing Trustees, as well as change the proper law and administration of the Trust.

The flexibility of the Gibraltar Trust means that there can also be a clause included enabling a change of the 'proper law' of the Trust and where it is administrated.

In the event that a counsellor is appointed, the Trustees have restricted power and require the written consent of the Counsellor in order to take certain action.

The specific powers assigned to the Counsellor can either be included in the Trust or detailed in a separate document. Provisions are generally made for the appointment of an alternative Counsellor in the event of death.

The courts will apply the recognised Trust law, based on the Hague Convention, where necessary to establish validity. This states that a said Trust is governed according to the law chosen by the client or corporation. In general, Gibraltar Trustees are appointed and Gibraltar Law is deemed the appropriate law of the Trust in question.

Sometimes, a holding company will be appointed to hold assets of the Trust. These may include any investments, such as property, stocks, yachts, etc. This, in turn, increases flexibility and provides the client with more control over the administration of the assets in question.

An added advantage of a holding company is that it can thwart any forced heir-ship rulings which could otherwise seriously impede the smooth execution of the Trust, particularly if that asset is in a country unfamiliar with the legalities of a Trust.

If the Trust assets are owned by a Gibraltar Company whose shares are held by the Trust, then this situation will not affect the assets in the event of the beneficiary's death, as the designated holding company continues to exist. Provided the Company and the beneficial owners meet certain criteria and pay an annual fee to the government of £225 the Company can be tax-exempt; thus making any profit tax-free.

The taxation of Trusts does not adhere to UK policy. If the Trust is set up for a non-resident of Gibraltar, no tax is due as long as the Trust is established and managed from 'the Rock'. The terms of the Trust must exclude residents of Gibraltar as beneficiaries. However, the Trustees may be Gibraltar residents, provided the Trust is managed from the Rock.

Likewise, if a non-resident of Gibraltar receives income from a Trust, (according to the Income Tax Ordinance), this is exempt from tax, even if the income is derived from outside of Gibraltar or if that income is received directly by the beneficiaries. Thus, Trust assets such as bank deposits held within a Gibraltar based financial institution are exempt from Gibraltar income tax.

In addition, Trusts are exempt from costly inheritance tax and no stamp duty is due on any transfer of assets, other than property in Gibraltar. Plus, there are no capital gains tax in Gibraltar and no gift or wealth taxes are payable.

If a Trust is established for an immoral or illegal purpose it may be declared void. Similarly, if a Trust is set up to defraud creditors or other persons (including a spouse or family members), or if the client becomes bankrupt within two years of establishing the Trust. The Trust may similarly be set aside if the client becomes bankrupt at any time within ten years of its establishment, unless it can be proved that, at the time the Trust was established, there were no debts which would necessitate Trust assets for settlement.

There is a distinction with Asset Protection Trusts, details of which are contained in our brochure titled "Asset Protection Trust" available upon request.

The cost depends on a number of factors, including the assets involved and the type of Trust elected. An approximate fee schedule is included hereafter, however it is recommended to arrange for a specific quote if you are interested in setting up a Trust.

Simple Trust? involving either property or an insurance policy initial set-up? GBP 350, plus annual fee of GBP 350.

Complex Trust? involving several assets, such as stocks, life policies, funds, etc.

Initial set-up is GBP 550, plus annual fee of GBP 550. Additional costs to be applied for such services as payment to or from Trust, addition or removal of assets, amendments, appointment of new Trustees/Counsellor, amendment of Memorandum of Wishes, opening bank account, portfolio management, etc.