Notwithstanding the targeting antiavoidance provisions referred to above, income tax at marginal rates may also apply on distributions to Irish resident beneficiaries based on first principles, which must also be taken into account. Establishing and maintaining an offshore trust can also be expensive, in terms of seeking legal and tax advices from multiple jurisdictions, implementation and ongoing administrative costs. A cost-benefit analysis should therefore be undertaken to ensure an offshore trust is an effective structure for the individuals concerned. How do investment vehicles, such as family limited partnerships or private investment funds, function within the context of Irish estate planning and asset preservation? Investment vehicles such as family limited partnerships fulfil this role, by allowing families to pass assets to a structure whereby the general partners (typically parents) retain a degree of control over the partnership assets (which could be investments or trading assets), which they wish to share and / or pass to their children during their lifetime. For the reasons outlined above, they can be a useful succession planning tool in the context of asset preservation and growth, while allowing parents to maintain control of the partnership assets. This contrasts to a trust structure where that degree of control can be lost following the establishment of a trust, particularly in the case of an offshore trust (where this control passes to the trustees). Some individuals may prefer to retain this element of control. They are also relatively straightforward to set up and ongoing compliance requirements are not overly burdensome, which makes them an 58 LAWYER MONTHLY DECEMBER 2024 attractive model for many individuals in the context of their Irish estate planning and asset preservation. Private funds are used more regularly by non-Irish resident families due to the favourable tax regime that apples for non-resident investors which justify the set up and administration costs involved. What are the specific legal and tax considerations for establishing trusts and investment vehicles for estate planning in Ireland? Specific legal considerations in Ireland include a trust law which is quite historic and requires appropriate drafting to overcome the deficiencies in the legislation. More recently, in line with broader anti-money laundering requirements, the obligation to register beneficial ownership of trusts was introduced under the 4th and 5th AntiMoney Laundering Directives which require each EU Member State to establish a Central Register of Beneficial Ownership of Trusts (CRBOT). The regulations are far-reaching and extend to most express trusts, where the obligation lies with the trustees to gather the relevant information and file the same via the Revenue Online Service. In terms of tax considerations, attention needs to be focussed on the taxresidency of the trustees to avoid a nonresident trust inadvertently becoming Irish tax resident, or in the alternative an Irish tax resident trust inadvertently becoming non-resident, subjecting the trust to a capital gain tax charge on exit. Other than the registration of Irish tax resident trusts in Ireland with Irish Revenue and the CRBOT filing requirement, there is no requirement to deposit the trust instrument with any government / Revenue authority.
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