Unlike, say, corporate law, where an attorney might never meet his ultimate principals, the essence of legal work in the private trust area resides in the relationship between principal and attorney.

An individual -- or board of directors, since an increasing amount of Bermuda's trust work is corporate in nature -- who appoints professional advisers to construct a safe haven for assets and then administer the resulting fortress, does so only when entirely certain of the probity of those to whom the assets are entrusted.

The word `trust' derives from the 13th Century Norse word traust , with an extended meaning related to solace. The modern word applies to arrangements by which property is held in trust and in a more general sense, to the confidence placed in the trustee.

Americans once applied the word, capitalised, to a group of enterprises which had combined to monopolise and control the market for a particular commodity, a technique now very much out of favour, as Bill Gates is learning.

The many uses to which trust vehicles are put, by contrast, have never been greater.

The principles underlying the practice of trust, the divorce of ownership and control of assets and the independent capacity of the trustee, are not well understood in parts of the world where the Napoleonic code still operates.

The trust industry is based on arrangements whereby an individual or corporate settlor transfers legal ownership of all or a portion of his, her or its estate to another person, the trustee, on the understanding that the trustee will use the entrusted assets only for certain purposes and the benefit of certain people.

Bermuda trusts are employed to achieve a variety of estate, personal, financial, tax or other business planning objectives.

The effective separation of owner and beneficiary makes the trust, in its many variations, a useful tool in the hand of the business planner.

Among the purposes to which clients of Bermuda lawyers put their trusts are: to make future provision for spouses and dependents; to protect assets from future personal liability; to minimise estate or inheritance taxes, income tax and capital gains tax; to preserve family wealth and the continuity of family business; to efficiently distribute assets upon death in a timely fashion; to protect against exchange controls; to create charities or make provision for them; to establish pensions or employee stock option plans; and to provide lender protection in corporate financing transactions. A range of trust vehicles is permitted in Bermuda, for all manner of reasons.

In most individual circumstances, the beneficiaries of trusts tend to be members of the settlor's family, or charities.

Corporate trusts serve a wide range of similarly-grounded needs, but on a larger scale. Bermuda services, under various trust arrangements, the assets of hundreds of international mutual funds, whose managers onshore and offshore invest, but do not administer, the pooled capital of their customers.

The unassuming practice of guardianship is a central service of the Bermudian law firms and banks and another arrow in the quiver of Bermuda's international business industry.

Given the privacy inherent in trust arrangements, there is no way to estimate the value of assets in trust in Bermuda or elsewhere, but the figure would likely be measured in billions of dollars.

Since so many other jurisdictions offer trust services, some with less attention to detail, what makes a Bermuda trust so attractive must be Bermuda itself -- its legal and regulatory environment, but more importantly, the safety of capital, the permanence of the jurisdiction and the absolute reliability of the trustee.

Roger Crombie is a respected journalist you can trust. He explains that the word trust is a 13th century Norse word trust with an extended meaning related to slace.

N.B.

This is the exact same Law Matters supplement that ran in The Royal Gazette on 20th September, 2000. However do the printing problems that affected the quality of the print, it was pulled from the circulation and did not appear again until the 9th October, 2000.