A trust is an equitable obligation
"A trust is an equitable obligation, binding a person (who is called a trustee) to deal with property over which he has control (which is called the trust property) for the benefit of persons (who are called the beneficiaries or cestuis que trusts), of whom he may himself be one".
According to Pettit  , Even before conquest, cases have been found of land being conveyed to one man to be held by him on behalf of or to the use of another. Trust developed at the time land ownership in England was based on the feudal system. When a landowner left and went on Crusades, he needed someone to run his estate in his absence, often to pay and receive feudal dues and to look after his family. To achieve this, he would convey ownership of his lands to a trusted person, on the understanding that the ownership would be conveyed back to him on his return. This practice started developing, and landowners saw where they would use such practise for their benefits. Some of the benefits were, to escape some of the feudal dues that fell on the person seized of land, to avoid feudal requirement of forfeiture, to avoid creditors and to effect testamentary disposition of land.
This device of the use led to a decline in feudal dues and as such the Statute of Uses in 1535, was enacted to bar the practise of use, in hope of increasing revenues. As a result, in 1540, the Statute of Wills was enacted to avoid the Statute of Uses. This method of avoidance was to create a use upon a use. This led to the creation of trusts.
One of the most important reasons for the creation of trusts is to avoid or mitigate the settlor’s liability to taxes. There are several circumstances under which one might wish to dispose of their property to reduce the incidence of taxation. These are where taxes are levied upon a person's estate upon their death; it is prudent to reduce the incidence of taxation by minimizing the size of estate. Similarly, where the property is income producing, disposing of the property may reduce the person’s income tax liability.
There are many ways in which this objective may achieve. One such way is moving ones assets to a different jurisdiction, such as a tax haven. This is a completely legal exercise, if it is conducted in the correct way. Lord Tomlin in Inland Revenue Commissioners v. Duke of Westminster,  said that “every man is entitled if he can to order his affairs so that the tax under a tax statute is less than it would otherwise be". The case was authority for the proposition that whatever the substance of the arrangements may have been, their fiscal effect had to be in accordance with the legal rights and obligations they created. Therefore, an offshore Trust, may achieve lower taxation or avoid tax completely that will establish a legal structure within the tax haven. An example of this is, where a father may transfer his assets in a company to his trustees for the benefit of his children, the trustees pay income tax at the basic rate of tax. On distributing the income, the beneficiaries, is entitled to set off their personal relief against the income liable to income tax.
One must also note that, the transfer of assets to the trustee maybe subject to transfer tax and stamp duty, which is payable on the transfer of immovable property. Income generated by trust is liable to income tax, therefore, a settlor, having exhausted his personal relief from income tax may alienate his income by way of a trusts in favour of another who may use his relief to reduce the amount of tax payable. If the trust effectively alienates income from the settlor, income tax liability after that is expected to be avoided. However, the settler continues to be liable to income tax on income from the settled property to the extent that it is for the immediate or deferred benefit of a spouse or minor. Nevertheless, the income of the trusts is not treated as a part of the trustees’ personal income but is taxed separately.
Subject to the fulfilment of specified conditions, taxation of trusts varies on the type of trust in existence. The most common type of tax avoidance trust is called the life interest trust. It is typically used by married couples. Section 6(4) of the Transfer Tax Act, express that, “life tenant is a person who is left to occupy a property until his/her death. At his/her death, no tax is chargeable, provided the life interest was given by the person to whom the Life Tenant was married". Therefore, when one spouse dies, the surviving spouse can inherit the entire estate tax-free, no matter how much it's worth. After the second spouse died, then Transfer Tax is chargeable.
If a trust is a discretionary trust, the maximum tax benefits may be obtain, providing that the settler and his spouse, does not benefit nor retain any benefit in the Trust. There are no Income Tax implications, apart from the fact that there will be less income in the hands of the settlor which may reduce his overall Income Tax liability. However, beneficiaries are liable to income tax on any income distributed to them or while they are entitled to it which is payable by the trustee. According to Duddington  , where tax on a discretionary trust is assessed in the hands of the trustee, after tax distributions to the beneficiaries are exempt from tax in their individual hands.
Unit trusts are shares divided amongst the beneficiaries based on how many fixed units each beneficiary own. Section 46(1) of the Income Tax Act of Jamaica “Where a society registered under the Industrial and Provident Societies Act or a building society, as the case may be, pays or credits share interest, it shall deduct from that payment or credit, a sum equivalent to 25 cents in the dollar". Therefore, the amount of taxes paid by the Shareholders depends on their individual shares in the trust.
A public trust, on the other hand, is exempt from taxes if the income is applied for charitable or religious purposes. According to section 12(h) of the Income Tax Act of Jamaica, states that there shall be exempt from tax where, “the income of any corporation or association organized and operated exclusively for religious, charitable, scientific, or educational purposes, no part of the net income of which enures to the benefit of any private stockholder or individual". Therefore, once charitable trust benefit members of the general public through charitable means, it offers many tax advantages to the settlor. This was seen in IRC v Educational Grants Association Ltd  , evidence showed that 76 per cent to 85 per cent of the association’s income had been applied to educate the children of persons connected with an associated commercial company. Despite this, the association had claimed a tax refund from the Inland Revenue. The Inland Revenue refused the refund, claiming that the association had failed to apply its funds to exclusively charitable ends.
Approved retirement trusts are also exempt from taxes, these are also known as pension scheme trusts. (See S. 60(1)(a,b,c) of the Income Tax Act) (Air Jamaica v Charlton .
I therefore submit, on evidence that trusts have been widely used as a planning tool to reduce the incidence of taxation; it is not entirely exempt from taxes. For this reason, while trust may help achieve certain goals, such as reduction of taxes and offers a number of tax advantages, tax avoidance should not be the sole motivation for creating a trust.