Anglo-Saxon Trust and Paraguay: Unlocking the Most Powerful Wealth Management Tool in 2026

The Anglo-Saxon trust is the most powerful—and most misunderstood—estate planning tool in the French-speaking world. Born from medieval English law, the trust allows for the separation of the legal ownership of an asset (held by the trustee) from its economic enjoyment (for the benefit of the beneficiary). This separation creates a unique asset protection shield: protection against creditors, sophisticated estate planning, intergenerational governance, and confidentiality.

However, for a French speaker, the trust is a minefield: France does not recognize the trust in civil law, taxes it aggressively (articles 792-0 bis et seq. of the CGI), and views it with suspicion since the offshore scandals. The crucial question in 2026: is an Anglo-Saxon trust relevant and optimizable for a Paraguayan tax resident? The answer is yes—but under specific conditions. This guide details everything.

The trust: understanding the mechanism

The three parties to a trust

• Settlor: the person who creates the trust and transfers their assets to it. This is you.
• Trustee: the person or entity who legally holds the assets and manages them according to the terms of the trust deed. Often a professional trust company based in a common law jurisdiction.
• Beneficiary: the person or people who economically benefit from the trust's assets (income, capital). Your children, your spouse, yourself (sometimes), a charitable foundation.

The trust deed

The trust deed is the foundational document that defines:

• The identity of the settlor, trustee, and beneficiaries
• The nature of the assets transferred (money, securities, real estate, company shares)
• The rules of management (trustee's power, restrictions, distribution conditions)
• The conditions for distribution to beneficiaries (at the trustee's discretion, at fixed dates, under conditions)
• The duration of the trust (perpetual or limited—depending on jurisdiction)
• The protector (optional): a trusted person who supervises the trustee and can replace them
• The governing law (law of the trust's jurisdiction)

Types of trusts

• Revocable trust: the settlor can modify or revoke the trust at any time. Maximum flexibility but minimal protection (assets remain "at the disposal" of the settlor).
• Irrevocable trust: the settlor can no longer modify or revoke the trust after its creation. Maximum protection (assets are no longer "theirs"), but loss of control.
• Discretionary trust: the trustee has full discretion over distributions to beneficiaries. Maximum flexibility for estate planning.
• Fixed interest trust: beneficiaries are entitled to fixed and predetermined distributions.
• Purpose trust: created for a specific objective (philanthropy, management of family assets) rather than for named beneficiaries.

The trust and French law: a minefield

France does not recognize the trust

French civil law does not contain the concept of a trust (the French fiducie, created in 2007, is a distant but much more limited cousin). Consequences:

• France considers the settlor to remain the "economic owner" of assets transferred to the trust (except for irrevocable trusts with effective loss of control)
• Trust assets are deemed to be part of the French settlor's estate for IFI (real estate wealth tax) and IR (income tax) purposes
• Trust distributions are taxable as income or as gifts/inheritances, depending on the case

Articles 792-0 bis et seq. of the CGI

Since the law of July 29, 2011, France has created a specific tax regime for trusts:

• Sui generis levy: an annual tax of 1.5% on the net market value of trust assets if the settlor or one of the beneficiaries is a French tax resident. 1.5% per year = 15% over 10 years = confiscatory.
• Transfer duties: distributions from the trust to beneficiaries are taxed as gifts (5-60% depending on family relationship) or as gratuitous transfers
• IFI: real estate assets held via a trust are included in the IFI assessment of the French resident settlor or beneficiary
• Reporting obligation: mandatory annual form 2181-TRUST for any trust linked to a French resident or national
• Fines: €20,000 fine for non-declaration of the trust

Why trusts are toxic for French residents

In summary: if you are a French tax resident and create or benefit from a trust, you pay 1.5% per year on assets + transfer duties on distributions + IFI + heavy reporting obligations + fines for oversight. This is the most punitive regime in Europe for trusts. This is why trusts are rarely used by French residents.

The trust for a Paraguayan tax resident: a paradigm shift

What changes when you are in Paraguay

When you become a Paraguayan tax resident and cease to be a French tax resident:

• No more 1.5% annual levy: the sui generis levy only applies if the settlor OR a beneficiary is a French tax resident. If you are no longer a French resident = levy abolished.
• No more IFI: trust assets are no longer subject to IFI (except for real estate located in France held via the trust)
• No more form 2181-TRUST: no French reporting obligation if you are no longer a French resident or tax national (but beware: French nationality alone can trigger certain obligations)
• Paraguay does not tax trusts: Paraguayan tax law does not contain a specific regime for foreign trusts. Foreign-source income distributed by a trust = 0% due to territoriality.

Important nuances

• Article 750 ter: if you have been a French resident for 6 of the last 10 years AND your beneficiaries are French residents, France may still tax trust distributions as gifts/inheritances
• French resident beneficiaries: if your children live in France and are trust beneficiaries, the distributions they receive are taxable in France (transfer duties + potentially 1.5% levy if the beneficiary is a French resident)
• French assets in the trust: if the trust holds assets located in France (real estate, shares of French companies), France retains the right to tax regardless of the settlor's domicile

The optimal scenario

The trust becomes tax-optimal when:

1. The settlor has been a Paraguayan tax resident for 6+ years (750 ter condition neutralized)
2. The beneficiaries are also outside France (no French taxation on distributions)
3. The trust assets are outside France (no French assets in the trust)
4. The trustee is in a favorable jurisdiction (Jersey, Guernsey, New Zealand, Singapore)
5. Result: 0% French taxation, 0% Paraguayan taxation = tax-neutral trust

Why use a trust from Paraguay?

If Paraguay already offers 0% on foreign income, why add the complexity of a trust? Because the trust provides benefits that simple residency cannot offer:

Asset protection

• An irrevocable trust legally separates your assets from you. In case of dispute, divorce, bankruptcy, or lawsuit, trust assets are not seizable (if the trust is properly structured and created before the dispute).
• For an entrepreneur whose assets are exposed to business risks (civil liability, customer disputes, personal guarantee), this protection is invaluable.

Intergenerational governance

• A trust can govern transmission over several generations: your children receive income but not capital, which passes to the next generation. This avoids the squandering of wealth by an irresponsible heir.
• The professional trustee ensures independent and competent management, even if the settlor dies.
• The protector (often a trusted family member) supervises the trustee and can replace them.

Advanced estate planning

• Trust assets do not form part of the settlor's estate (for an irrevocable trust). They pass directly to beneficiaries according to the terms of the trust deed, without probate, without delays, without inheritance tax.
• From Paraguay: 0% inheritance tax on trust assets (if conditions are met).

Confidentiality

• In some jurisdictions (Jersey, Guernsey, Cayman Islands), trusts are not publicly registered. Beneficiaries and assets remain confidential.
• Advantage for families who want discretion over their wealth.

Distribution flexibility

• A discretionary trust allows the trustee to adapt distributions according to the needs of each beneficiary: more for the one who needs to finance their studies, less for the one who is already financially independent.
• Adaptation to life changes (marriage, divorce, illness, birth) without having to modify the structure.

Trust jurisdictions suitable for Paraguayan residents

Jurisdiction	Advantages	Disadvantages	Setup cost	Annual cost
Jersey / Guernsey	Excellent reputation, mature legal framework, reputable trustee companies, confidentiality	High cost, CRS compliance, EU pressure	€10,000-€30,000	€5,000-€15,000
New Zealand	NZ Foreign Trust: 0% income tax on foreign income, clean reputation, modern Anglo-Saxon law, unlimited duration since 2019	Geographical distance, increased reporting since 2017	€5,000-€15,000	€3,000-€8,000
Singapore	Asian financial hub, solid legal framework, leading trust companies	High cost, strong compliance pressure	€15,000-€40,000	€8,000-€20,000
Cook Islands	Maximum asset protection (impossible for a foreign court to break), strong confidentiality	Controversial offshore reputation, sometimes difficult banking acceptance	€8,000-€20,000	€5,000-€12,000
Belize	Low cost, Latin American proximity, unlimited duration, strong asset protection	Limited reputation, variable substance and trustee quality	€3,000-€8,000	€2,000-€5,000
Liechtenstein (Stiftung)	Continental equivalent of the trust, reputable, unique legal framework	High cost, increasing EU/OECD pressure	€15,000-€50,000	€5,000-€20,000

For a French-speaking Paraguayan resident, the best options in 2026 are generally New Zealand (optimal value for money, 0% income tax on foreign trust income) and Jersey/Guernsey (leading reputation and legal framework for significant wealth).

Trust + Paraguay structuring in practice

Typical architecture

• You (settlor): Paraguayan tax resident
• Trust: created in Jersey, New Zealand, or another favorable jurisdiction
• Trustee: professional trust company in the trust's jurisdiction
• Protector: yourself or a trusted family member (supervising the trustee)
• Beneficiaries: your children, spouse, and/or yourself (if revocable) — ideally residents outside France
• Trust assets: cash, financial portfolio (stocks, ETFs, bonds), US LLC shares, crypto, real estate outside France

Revenue flow

1. Trust assets generate income (dividends, interest, capital gains)
2. This income is received by the trust (trustee)
3. If NZ trust: 0% income tax on foreign income at the trust level
4. The trustee distributes to beneficiaries according to the trust deed (discretionary or fixed)
5. Paraguayan resident beneficiaries receive distributions: 0% (foreign source income)
6. Result: 0% at the trust level + 0% at the beneficiary level = 0% total

Assets typically placed in the trust

• International financial portfolio: stocks, ETFs, bonds, PE funds — managed by the trustee or a delegated manager
• US LLC shares: your LLC can be held by the trust (the trust is the "member" of the LLC). LLC income flows up to the trust at 0%.
• International real estate: real estate outside France (Paraguay, USA, others) held via the trust
• Cryptocurrencies: the trust can hold crypto wallets (via specialized trustee company)
• Life insurance: the trust can be a beneficiary of a life insurance policy (allows distribution outside of succession)
• DO NOT put in the trust: assets located in France (risk of French taxation regardless of domicile)

The specific case of the NZ trust (New Zealand)

Why the NZ trust is ideal for the Paraguayan resident

The New Zealand foreign trust offers a unique framework:

• 0% income tax on foreign income: if the settlor is not an NZ resident and the income is not NZ-sourced, the trust pays no tax in New Zealand
• Modern Anglo-Saxon law: recently modernized Trusts Act 2019, clear and predictable legal framework
• Unlimited duration: since 2019, no more "rule against perpetuities" = the trust can last indefinitely
• Clean reputation: New Zealand is not a controversial tax haven—OECD, G7+ member, high transparency
• Reasonable cost: setup €5,000-€15,000, maintenance €3,000-€8,000/year
• Reporting obligations: the trust must be registered with the IRD (Inland Revenue Department) NZ and provide information on the settlor and beneficiaries. Transparency but no taxation.

Caution since 2017

New Zealand strengthened reporting obligations for foreign trusts in 2017 following scandals (Panama Papers). The trust must now:

• Be registered with the IRD
• Annually provide information on the settlor, beneficiaries, trustee
• Produce annual accounts
• Provide this information to the tax authorities of the beneficiaries' countries via CRS if applicable

This is not an obstacle (it's compliance, not taxation) but it means that the NZ trust is NOT a vehicle for concealment. It is a legitimate structuring vehicle with transparency.

Trust vs. other tools: comparison from Paraguay

Criterion	Trust (NZ/Jersey)	US LLC	Luxembourg Life Insurance	Foundation (Liechtenstein)
Asset protection	Excellent (irrevocable)	Limited (member's assets)	Good (security triangle)	Excellent
Intergenerational governance	Excellent	Limited	Beneficiary clause only	Excellent
Income tax (PY resident)	0% (NZ foreign trust + PY territoriality)	0% (pass-through + PY)	Neutral capitalization, tax on redemption	~1,800 CHF/year min + 4% distributions
Transmission upon death	Outside succession (irrevocable)	Within succession	Outside succession (beneficiary clause)	Outside succession
Distribution flexibility	Maximum (discretionary)	At the member's discretion	Free redemption	According to foundation statutes
Annual cost	€3,000-€15,000	€1,000-€2,000	0.5-1.5% of assets under management	€5,000-€20,000
Complexity	High	Low	Moderate	High
Recommended wealth threshold	> €2-3M	Any amount	> €500,000	> €5M

Verdict: The trust is the most powerful tool for asset protection and intergenerational governance. The US LLC is simpler and cheaper for day-to-day management. Luxembourg life insurance is the best transmission vehicle for French resident beneficiaries. The Liechtenstein foundation (Stiftung) is the continental equivalent of the trust with higher costs.

The optimal approach generally combines US LLC (day-to-day management) + Trust (asset protection and intergenerational governance) + Luxembourg life insurance (transmission to French beneficiaries). The three tools are complementary, not competing.

Case studies

Case 1: Post-exit entrepreneur, €5M wealth, 2 children (1 in Paraguay, 1 in France)

Thomas sold his startup. Wealth: €5M (US LLC + crypto + PY real estate). PY resident for 7 years. Child A (28 years old) lives in Paraguay. Child B (25 years old) lives in Paris.

Recommended structure:

• NZ Trust (irrevocable discretionary): holds €3M (financial portfolio + US LLC shares). Beneficiaries: child A and child B.
• Distributions to child A (PY): 0% (beneficiary outside France, foreign source income)
• Distributions to child B (FR): taxable in France (transfer duties if qualified as a gift, or income tax if income). Solution: supplementary Luxembourg life insurance for child B's share (beneficiary clause outside succession).
• PY Real estate (€2M): held directly or via Paraguayan SA (no need for a trust for local real estate).

Result: protected wealth, established intergenerational governance, 0% distributions to child A, optimized transmission to child B via life insurance.

Case 2: Wealthy family, €20M wealth, 3 generations

The Martins (grandparents + children + grandchildren). Wealth: €20M diversified. PY residents for 10+ years. All adult children outside France.

Complete structure:

• Dynasty trust Jersey (irrevocable): €15M international financial portfolio. Beneficiaries: current and future descendants. Trustee: reputable Jersey trust company. Protector: eldest son.
• US LLC: operational vehicle held by the trust for daily investment management.
• Paraguayan SA: local real estate (€3M), managed by operational family office.
• PY Philanthropic Foundation: €2M for family charitable activities.

Taxation: 0% on international income (Jersey trust + US LLC + PY territoriality). Maximum asset protection. Intergenerational governance over 3+ generations. €20M wealth transferable with 0% duties as long as the family remains outside France.

Critical pitfalls

The pitfall of the revocable trust

A revocable trust offers almost no asset protection: if you can recover the assets at any time, your creditors can too (by court order). Moreover, most tax authorities consider that the settlor of a revocable trust remains the effective owner of the assets. For true protection and true patrimonial separation, the trust must be irrevocable.

The "settlor-beneficiary" pitfall

If you are both the settlor AND the sole beneficiary of the trust, most jurisdictions (and tax authorities) consider the trust to be a "sham" and do not recognize the patrimonial separation. Make sure that the beneficiaries include people other than yourself (children, spouse).

The compliant trustee pitfall

If you maintain total control over the trustee (you dictate all decisions, he has no independence), the trust can be reclassified as a nominee arrangement (simple nominee). The trustee must have real independence in management. This is why professional trust companies are recommended over a friend or family member as a trustee.

The CRS (Common Reporting Standard) pitfall

CRS requires financial institutions to report accounts held by trusts to the tax authorities of the beneficiaries' country of residence. Your Swiss bank will report the trust's accounts to Paraguay (no problem, 0% in PY). But if a beneficiary is a French resident, the report will also go to France → vigilance if beneficiaries are French residents.

The pitfall of French retroactivity

If you create a trust as a Paraguayan resident but later return to live in France, the punitive French regime (1.5%/year, declaration obligations) will apply immediately. Only create a trust if your expatriation project is sustainable and you do not plan to return to France.

The timing pitfall: don't create the trust too early

If you create a trust and transfer assets to it while you are a French resident (or recently expatriated < 6 years), France may treat the transfer as a taxable donation (transfer duties 5-60%). Wait until the condition 750 ter (6+ years of expatriation) is neutralized for significant transfers.

The ecosystem for creating and managing a trust from Paraguay

• Paraguayan tax residency — fundamental prerequisite (6+ years recommended before trust creation)
• Lawyer specializing in international trusts: Anglo-Saxon firm (Jersey, NZ, Singapore) with experience with French-speaking clients. Budget: €10,000-€40,000 for setup.
• Trust company (professional trustee): accredited fiduciary company in the chosen jurisdiction. Annual fees: €3,000-€15,000.
• International mobility tax specialist: to verify that the 750 ter conditions are neutralized and that the structure is fiscally optimal
• US LLC (operational vehicle held by the trust)
• International private bank: account in the name of the trust (Switzerland, Singapore, Luxembourg)
• Luxembourg life insurance broker: if beneficiaries are French residents (optimized transmission)

Conclusion

The Anglo-Saxon trust is the most powerful wealth management tool available — but it is fiscally toxic for French residents (1.5%/year levy, transfer duties, declaration obligations). This is why it is almost unused in France.

Paraguay completely changes the equation: as a Paraguayan tax resident, you can create and benefit from a trust without any French taxation (if 750 ter conditions are neutralized) and without any Paraguayan taxation (0% territoriality on foreign income). The trust then becomes a tool for asset protection, intergenerational governance, and 0% transmission — everything it is designed to be, without the French tax penalty that made it unusable.

The trust is not suitable for all profiles: it is recommended for wealth > €2-3M, multi-generational families, entrepreneurs with significant business risks, and profiles who want structured long-term wealth governance. For wealth < €2M, the combination of US LLC + PY residency is sufficient and much simpler.

For wealthy families considering Paraguay, the trust is the cornerstone of the wealth architecture — the layer of protection and governance that tops the US LLC + PY residency + local real estate structure. It is the culmination of international wealth strategy.

Are you considering an Anglo-Saxon trust from Paraguay? Contact our team for a personalized relevance analysis: needs assessment, jurisdiction selection, referral to an international trusts lawyer, coordination with your tax specialist, structuring of US LLC + trust + life insurance. Your wealth deserves the best architecture.