When a settlor creates a trust, he relinquishes legal ownership, and thus control, of the assets he places into trust, which then fall under the control of trustees appointed by the settlor.Most settlors find this idea to be largely unpalatable, even where doing so would enable them to enjoy the considerable benefits that come with establishing a trust of their assets.These include the mitigation (or deferral) of taxes, the protection of assets from creditors or from political risk, the avoidance of forced heirship rules in the settlor’s home country, the orderly succession of assets after death or the continuity of a family business following the settlor’s death.Fortunately, Bermuda has responded to this quandary through the introduction of reserved power trusts.Reserved power trusts make it possible for the settlor (or another party of his choosing) to retain fairly extensive rights and powers, thereby enabling him (or the other party) to exercise significant control over the way that the trust is administered and, thus, the trust property.Such rights and powers may typically include the power to add and exclude beneficiaries, the power to remove trustees and to appoint new ones, the power to change the law that governs the trust, the power to vary or amend provisions of the trust deed and the retention of investment powers over the trust assets.Reserved power trusts have paved the way for a greater level of settlor participation and the benefits are tangible, but there may be some risks.Depending upon the level of control that the settlor exercises over the trust, invalidity issues may arise as there may be allegations that the trust is a sham or a mere nominee arrangement.An attempt to attack the trust structure could come from a whole array of litigants such as a disgruntled beneficiary, a divorcing spouse or a creditor, all of whom would come to the court in the hope of setting the trust aside in order to access the trust fund.However, a trend has emerged in recent years where a growing number of offshore jurisdictions have sought to enact legislation specifically permitting settlors to retain wide powers over the trust without fear of the validity of the trust being jeopardised.As a result, there is less of a risk of the trust being struck down because of invalidity concerns. These legislative enactments largely confirm the position under the common law, but add certainty.Furthermore, the retention of control over the trust may cause difficulties for the settlor from an onshore tax perspective. In such cases, it would be important to ensure that the settlor’s desire for control was balanced with the potential for an onshore tax authority to see through the trust and to tax it accordingly.The laws of Bermuda provide for the creation of reserved power trusts and a settlor is free to retain extremely wide powers over the trust without having to be concerned with any of the validity issues discussed above. This was confirmed in a recent ruling of the Supreme Court of Bermuda.Reserved power trusts have certainly found appeal with some previously reluctant settlors and the enactment of reserved power legislation continues to fuel their growing popularity.They provide yet another example of the evolution of offshore trust structures created by an offshore trust industry continually having to innovate and create bespoke structures in order to meet the demand for increasingly novel trust solutions.As with all complex matters of law, it is sensible to consult an expert in the area.Naresh Chand is a Senior Associate in the Private Client and Trusts Practice at Appleby. A copy of this column can be obtained on the Appleby website at www.applebyglobal.com.This column should not be used as a substitute for professional legal advice. Before proceeding with any matters discussed here, persons are advised to consult with a lawyer.