Providing for Grandchildren Through a Trust

A trust for grandchildren in Mauritius is a way for grandparents, and sometimes parents, to set assets aside for a generation that may be years away from managing money. The settlor transfers assets to a trustee, and the trust deed explains who benefits, when and for what purposes. Unlike a simple gift, the assets stay under the trustee's administration, so the family keeps a say in how they are used long after the transfer.

This page looks at the multi-generational angle: how a trust can skip a generation, how it can finance a grandchild's education or first venture, and what the law requires. Trusts set up for very young children as such are covered in trust for minor children. General information only: the right design depends on your family, your residence and your assets, and needs an adviser's analysis.

Why families look at grandchildren specifically

Grandparents often want something different from what they would ask of a trust for their own children. They may wish to:

• leave their own children free to enjoy the family wealth while ensuring the next generation is also provided for;
• finance specific projects, such as university fees or a first home, rather than hand over a lump sum;
• keep a family business or a block of property together for a generation that has not yet shown what it wants to do;
• avoid dividing assets into ever smaller shares at each death.

A trust handles these goals better than a will alone because it can last beyond the death of the settlor and can give the trustee ongoing discretion. For the choice between the two tools, see trust or will for passing on assets.

What "generation skipping" means in practice

You will see the phrase "generation skipping trust" in articles about foreign systems. Mauritian law has no separate trust category with that name. What exists is an ordinary trust, governed by the Trusts Act 2001, whose deed names grandchildren (or a class such as "my grandchildren, born and yet to be born") as beneficiaries, with the settlor's children receiving income, a life interest, or nothing at all.

Three common patterns exist:

• Children and grandchildren together. The deed names both as a class, and the trustee decides who receives what.
• Life interest then capital. A child enjoys income for life, and the capital passes to the grandchildren afterwards. See life interest trust.
• Direct provision. The grandchildren are the main beneficiaries from the start, with the children excluded or included only for some purposes.

Whichever pattern you choose, the deed must identify the beneficiaries clearly, or define a class precisely enough for the trustee to know who falls within it. A trust that benefits only the settlor is not allowed: under section 8 of the Trusts Act 2001 the settlor may also be a trustee, beneficiary, protector or enforcer, but cannot be the sole beneficiary of the trust.

Dynasty-style planning: how long can it run?

The term "dynasty trust" is used for a family trust meant to run for generations. In Mauritius the practical question is the maximum period the trust may last, and the deed should state it. The rules are explained in how long a Mauritius trust can last. A trust meant for grandchildren and great-grandchildren must be drafted with that limit in mind, and with a clear mechanism for what happens when the period ends.

Long-running trusts also need living governance. Trustees retire, protectors die, family circumstances change. A good deed provides for replacement, review and variation. See changing the terms of an existing trust and how to replace a trust protector.

A structure for three generations

In this model the trustee holds the assets and applies the deed. The children and grandchildren are beneficiaries, and a protector can hold specific powers, such as removing a trustee. The qualified trustee is, under section 2 of the Trusts Act 2001, an FSC-licensed corporate service provider (Management Licence) (an FSC-licensed corporate service provider (Management Licence)) or another person resident in Mauritius authorised by the FSC to provide trustee services.

Funding education and projects

A trust is useful for grandchildren because the deed can attach purposes to money. Typical provisions include:

• tuition and living costs at school, university or vocational training, in Mauritius or abroad;
• a contribution to a first home or a business start-up, released against a plan;
• support for a grandchild with a health condition (see a trust for a child with disabilities);
• a staged release of capital at stated ages or events.

Fixed rules or discretion?

The deed can fix entitlements (for example, equal shares for each grandchild) or give the trustee discretion to meet each person's needs. Discretion suits a family where grandchildren will have unequal needs, but it relies on the trustee's judgment and on guidance from the settlor. See discretionary trust in Mauritius and discretionary trust vs fixed trust.

A letter of wishes is the usual companion. It is not binding, but it tells the trustee how the settlor would like funds to be used, for instance "prefer education costs over holidays", and can be updated without changing the deed.

Protecting grandchildren from themselves

Some families worry that a young adult will receive money too soon. The deed can delay distributions, pay bills directly instead of cash, or limit what a beneficiary can assign to a creditor. For that, see spendthrift trusts and protective trust.

Comparing ways to provide for grandchildren

Related comparisons: gift to children or trust and trust or life insurance.

Succession law and forced heirship

Mauritian succession rules reserve part of an estate for certain heirs, usually children. Grandparents who want to favour grandchildren should understand how this works before moving assets. In the Trusts Act 2001, a transfer made by a settlor who is not a Mauritian citizen cannot be set aside under the succession rules of the settlor's domicile or nationality. For citizens and residents the position is different, and the interaction with reserved shares is a subject on which professional advice is essential. See forced heirship and trusts in Mauritius and, for the general question, can you disinherit a child in Mauritius?.

Grandchildren born outside marriage or from a blended family raise their own questions. See inheritance rights of children born outside marriage and a trust for a blended family.

Tax points to check

Tax depends on who the settlor, trustee and beneficiaries are, where they live, and what the trust holds. Some basics from the Income Tax Act 1995, as consolidated up to the Finance Act 2026:

• a trust is taxable on its taxable income at the rate in Part IV of the First Schedule, which is 15%;
• the exemption for a non-resident trust on filing a declaration of non-residence was repealed by the Finance Act 2021, with effect deemed from 1 July 2021, and no longer exists in the consolidated version.

Distributions to grandchildren, and the position of beneficiaries living abroad, raise separate questions. Read how trusts are taxed in Mauritius, tax on distributions to beneficiaries and tax for non-resident beneficiaries. Do not assume that a trust reduces tax; see can a trust reduce tax?.

What the law requires of the trustee

A trust governed by Mauritian law and administered by a qualified trustee comes with regulatory duties that protect the family:

• acting as a corporate trustee or qualified trustee requires a management licence from the FSC under the Financial Services Act 2007;
• under section 26A of that Act, the FSC keeps a register of trusts that have at least one qualified trustee, and the qualified trustee must supply the information required;
• under section 33 of the Trusts Act 2001, as rewritten in 2019, the trustee keeps information about the trust confidential, and the court orders disclosure only at the request of an investigating authority when the information is needed in good faith for an investigation or trial relating to financial crime;
• qualified trustees are reporting persons under the FIAMLA and must carry out customer due diligence.

For the confidentiality position, read are Mauritius trusts confidential? and is there a register of trusts?.

Practical decisions before you start

If the answer is yes, the following points need attention:

• Who is the trustee? A qualified trustee, as defined above.
• Who are the beneficiaries? Named grandchildren, a class, or both, with a rule for those born later.
• Who guards the trustee? A protector, with defined powers. See do you need a trust protector?.
• What if the settlor dies? See what happens to a trust when the settlor dies.
• How are assets finally shared? See how trust assets are distributed to beneficiaries and how a trust ends.

Checklist before meeting an adviser

• List the grandchildren, born and expected, and any class wording you want
• Decide whether your own children are beneficiaries, and in what way
• Note the purposes you want to fund, such as education, housing or business
• Check where each family member is resident and taxed
• Review the effect of forced heirship rules on your estate
• Draft a letter of wishes for the trustee
• Choose a protector and a successor
• Plan an annual review (see the annual family trust review checklist)

When you are ready to discuss your situation, you can send a request through the contact form.