There are multiple vehicles available to structure assets effectively. The three most commonly used in the  Isle of Man are trusts, companies and foundations. Each has its distinct characteristics; when structured  appropriately, they may also complement one another. This blog summarises the key features of  each vehicle and how you may benefit from their use. 

What is a trust?

A trust is a legal relationship in which a settlor transfers assets to one or more trustees, who hold and  manage them for the benefit of named beneficiaries or a defined class of beneficiaries, in accordance with  the terms of a trust deed. 

Discretionary trusts are the most frequently used form of trust in the Isle of Man. They provide flexibility,  allowing trustees to determine how and when distributions are made, and enabling changes to  beneficiaries in line with the trust deed. 

Trustees exercise discretion over income and capital distributions; beneficiaries have no automatic  entitlement. The settlor may however issue a non-binding letter of wishes to guide trustee decision making. 

Roles and duties

• Settlor – transfers legal ownership of assets from his/her estate to the trustee. • Trustee – Holds legal title to the trust assets and owes fiduciary and statutory duties to the beneficiaries. Corporate trustees must hold the appropriate licence issued by the Isle of Man Financial Services Authority. 
• Beneficiary – Persons or class of persons entitled, or potentially entitled, to assets under the trust deed. 
• Protector – Optional oversight role; may hold certain powers such as consent for trustee changes or distributions. 

What is a company? 

A company is a separate legal entity incorporated under the Isle of Man Companies Acts (1931 or 2006). The most common form is a private company limited by shares, which limits shareholder liability to the  amount unpaid on their shares. 

Most Isle of Man resident companies benefit from a 0% corporate income tax rate, subject to certain  exceptions (such as banking and Isle of Man land income). To maintain Isle of Man tax residence,  management and control should be exercised on the island, through Isle of Man resident directors and  local board meetings. The Isle of Man also participates in the UK VAT regime, allowing eligible businesses  to register for VAT locally.  

These features make Manx companies attractive for trading, asset holding, and international structuring. 

Roles and duties 

• Director – legally responsible for running the company. Under the 1931 Act, a minimum of two natural-person directors is required; under the 2006 Act, one director (who may be a corporate director) is sufficient. 
• Shareholder/Member – The legal owner(s) of the shares in the company and may receive dividends if declared. 
• Registered Agent – For 2006 Act companies, a licensed Isle of Man corporate service provider must be appointed as registered agent. 

What is a foundation?

The Isle of Man Foundation is a modern, flexible structuring vehicle established under the Foundations  Act 2011. It combines characteristics of both companies and trusts, offering a legal entity with separate  legal personality and limited liability, while retaining the ability to pursue private or purpose-based  objectives.  

Foundations are commonly used for wealth management, succession planning, philanthropy, and asset  protection purposes. A foundation which may own and manage assets in its own name, however the  founder of a foundation may include provisions to retain some form of control. 

Roles and duties

• Founder – transfers legal ownership of the assets from his/her estate to the foundation.
• Foundation Instrument – the primary constitutional document that legally establishes a foundation as a separate legal entity. 
• Foundation Rules – Set out the administrative framework, including appointment/retirement of council members and decision-making processes. Contains the ‘objects’ which is the purpose for which the foundation is established. The objects may be to benefit a person or a class of persons (similar to a trust), to carry out a specified purpose, or both. 
• Council Member – responsible for running the foundation in accordance with the foundation rules, which can be similar to a board of directors in a company. The foundation rules detail how the council members are to deal with all administrative matters.
• The Enforcer – an optional appointment like that of the Protector of a trust. The enforcer is there to ensure that the council of the foundation carries out its functions in the best interests of the foundation and may hold the council to account for the way it administers the assets.
• Registered Agent – Foundations are required to have a a licensed Isle of Man corporate service provider appointed as registered agent.

Conclusion

Each vehicle offers unique benefits, and in many cases, a combination of trusts, companies, and  foundations provides the most effective structuring solution. Eximia Limited’s experienced fiduciary  professionals can assist with the design, establishment, and administration of Isle of Man structures  tailored to clients’ specific planning objectives.

This blog is intended for informational purposes only and should not be construed as legal or financial advice.