Delaware trusts

Delaware trustsSince 2003, Healy Consultants PLC helps our multi-national Clients register Delaware trusts. Considerations include:

  • The foremost advantage of the Delaware Statutory Trust is flexibility. The Act permits the trust deed to establish whatever rights and obligations the trustees, the beneficial owners, and other persons desire;
  • A statutory trust is formed with the filing of a certificate of trust with the Secretary of State;
  • The governing instrument is the trust agreement and no requirement it be filed or recorded in Delaware;
  • The certificate of trust must set forth the name of the statutory trust and the name and the business address of at least one trustee who is a resident of or has a principal place of business in Delaware;
  • The governing instrument may also contain provisions defining the rights, duties, and obligations of the trustees, the beneficial owners, and other persons;
  • Because the statutory trust is a legal entity separate from its beneficial owners and its trustees, the property of the statutory trust is not deemed to be the property of the beneficial owners, and no creditor of a beneficial owner has any right to obtain possession of, or otherwise exercise legal or equitable remedies with respect to, the property of a Delaware statutory trust;
  • The beneficial interests in a Delaware statutory trust may be evidenced by the issuance of trust certificates or by any other method, such as book-entry registration, in conformity with the applicable provisions of the governing instrument of the statutory trust;
  • Except as otherwise provided in the governing instrument, a beneficial owner is entitled to an undivided beneficial interest in the property of the statutory trust and may share in the profits and losses of the statutory trust in the manner set forth in its governing instrument;
  • A beneficial owner’s interest in a Delaware statutory trust is deemed to be personal property, notwithstanding the nature of the trust property;
  • A statutory trust created pursuant to the Delaware Statutory Trust Act may carry on any lawful business or purpose;
  • Neither the trustees nor the beneficial owners of a statutory trust will have any personal liability for the obligations of the statutory trust unless otherwise provided in the governing instrument;
  • A beneficial owner is entitled to the same limitation of personal liability extended to stockholders of corporations organized for profit under the General Corporation Law;
  • Delaware law facilitates the use of investment advisers by making it clear that a trustee may follow the direction of an adviser authorized by the governing instrument to give such direction without breaching the trustee’s fiduciary responsibility;
  • it is possible to structure the Delaware statutory trust so that it is taxed as a pass-through entity, such as a partnership, for income tax purposes;
  • Alternatively, the statutory trust may be structured to obtain grantor tax treatment or corporate tax treatment. All that is required is the inclusion of appropriate provisions in the governing instrument;
  • The governing instrument gives the beneficial owners the right to direct the trustee in the management of the trust’s business and affairs; including i) the sale and purchase of the trust’s assets and ii) the appointment of new trustees;
  • The Act also contemplates the use of persons or entities other than the beneficial owners to direct the trustee’s management over the trust’s affairs and business. For example, managers or administrators, could be appointed by the trustee.

Contact us

For additional information on our trust formation services in Delaware, please email us at email@healyconsultants.com. Alternatively please contact our in-house country expert, Mr. Paavan Chhabra, directly:
client relationship officer - Paavan