The real question behind company vs trust for international property ownership
At the higher end of the funnel, the question is not whether a trust or company for property ownership is inherently “better”, but what outcome the structure is intended to achieve.
International property ownership exists within a moving landscape. Families relocate, assets appreciate, relationships evolve, and political or regulatory environments change. Structures that appear robust at acquisition may later be examined in entirely different forums — family courts, probate proceedings, or creditor actions — often decades later.
The strategic starting point is therefore to identify the pressure points:
- Is the objective lifetime control, or orderly succession beyond death or incapacity?
- Is the dominant risk matrimonial, creditor-driven, or linked to forced heirship regimes?
- In which jurisdiction are disputes most likely to arise, and where would judgments ultimately be enforced?
How ownership is perceived in law: form versus reality
Companies remain a cornerstone of international real estate structuring because of their separate legal personality. The foundational principle was set out in Salomon v A Salomon & Co Ltd [1897] AC 22, where the House of Lords stated that:
“The company is at law a different person altogether from the subscribers to the memorandum.”
This principle underpins the use of holding companies for property, particularly where owners seek operational simplicity or consolidated ownership.
However, Salomon does not guarantee immunity from scrutiny. In Prest v Petrodel Resources Ltd [2013] UKSC 34, the UK Supreme Court clarified that while piercing the corporate veil is exceptional, courts may still examine the underlying reality. Lord Sumption observed that:
“The concealment principle is legally banal and does not involve piercing the corporate veil at all.”
In that case, properties held by companies were treated as being held on trust for the individual, based on evidence of intention and control. The lesson is that legal title alone does not determine outcome.
Trusts, by contrast, are built on fiduciary ownership. The trustee holds title not for itself, but for the purposes of the trust. Where this fiduciary framework is genuine and properly administered, property ownership through a trust can deliver continuity and clarity. Where it is not, courts may question whether the trust reflects reality.
Control, governance, and the illusion of simplicity
A persistent misconception is that companies are inherently simpler than trusts. This is not always the case.
Companies centralise control through shareholders and directors. This can be efficient, but it also concentrates risk. On death, incapacity, or family dispute, shares become succession assets and may be exposed to forced heirship claims or matrimonial proceedings.
Trusts operate differently. They are governance mechanisms as much as ownership vehicles. Their strength lies in separating control, enjoyment, and succession. Yet this strength depends on independence and discipline. In In the Matter of the Esteem Settlement (Royal Court of Jersey, 13 June 2003), the court reaffirmed that a trust would only be a sham where there was a common intention to mislead, but also warned against excessive settlor control. The court noted that the principle “donner et retenir ne vaut” — to give and retain is of no effect — remains a real risk where control is illusory.
The message for internationally mobile families is clear: governance quality outweighs structural labels.
Succession, forced heirship, and family disputes
Cross-border estate planning property issues frequently arise in unexpected ways. A personal holiday residence may later become subject to matrimonial proceedings. An investment property may fall within the scope of forced heirship rules in a jurisdiction the owner never considered relevant.
Companies often defer succession rather than resolve it. Shares may be subject to inheritance regimes linked to the shareholder’s domicile or nationality. Trusts, while not immune, can provide a more coherent framework for managing intergenerational transitions — particularly where beneficiaries and assets are dispersed internationally.
The critical issue is not where the structure is formed, but which court will ultimately assert jurisdiction.
Privacy, transparency, and the modern compliance reality
Both companies and trusts operate within an environment of increasing transparency. Beneficial ownership reporting, regulatory disclosures, and litigation discovery have narrowed the gap between perceived and actual confidentiality.
Nominee arrangements, often confused with trusts, are particularly vulnerable. In Commissioner v Bollinger, 485 U.S. 340 (1988), the US Supreme Court accepted that a corporation holding title to property could be treated as an agent rather than the true owner, but only where agency was genuine, documented, and consistently applied. The case illustrates that courts focus on substance, conduct, and evidence, not terminology.
When structures are tested: disputes and re-characterisation
The most instructive insights into company vs trust for international property ownership emerge from disputes rather than planning memoranda.
In family and creditor litigation, courts routinely analyse who exercised control, who benefited economically, and whether the structure was respected in practice. In Ben Hashem v Al Shayif [2008] EWHC 2380 (Fam), the court undertook a detailed examination of corporate and trust-like arrangements to determine whether assets should be treated as personally owned. The case illustrates how form gives way to function when structures are tested.
For sophisticated owners, the objective is not to avoid scrutiny, but to ensure that a structure remains defensible when scrutinised.
Strategic implications for internationally mobile families
Three strategic themes consistently emerge:
- Structure follows risk, not fashion — popularity in one market rarely translates seamlessly across borders.
- Layering often enhances resilience — separating the holding vehicle from governance arrangements can reduce single-point failure.
- Jurisdiction is a second-order decision — understanding how companies and trusts behave under stress should precede jurisdiction selection.
In this light, company vs trust for international property ownership is not a binary choice, but a design decision within a broader asset-holding strategy.
What this means for you
A well-designed property holding structure does more than hold real estate. It preserves optionality to be able to change depending on future evensts, manages family dynamics, and reduces the risk that courts will retrospectively determine ownership outcomes.
This publication is intended as a an indication of the main issues to be considered rather than a technical manual. The appropriate solution will always depend on the jurisdictions involved, the family profile, and long-term objectives — matters that require tailored legal advice grounded in cross-border experience which our lawyers can offer.
