|
|||||
|
|
|||||
|
Trusts
Belize
Services available from Belize:
THE TRUST & THE TRUST ACT
1992
ABOUT TRUSTS
The concept of Trust is not a new one, in fact evidence of its use dates back to the time of the Romans. However, it was not until the 13th Century that the notion of "common law trusts", as we know it today, emerged. Today, most if not all fortune 500 companies and their principals engage in some form of "offshore" business activity, and Trusts have become one of the dominant instruments to facilitate such activities. The reason for this is simple really, as every individual or company has a desire to protect, preserve and enhance their wealth, and the offshore environment has presented itself as the principal means for realizing these goals as it offers:-
-
Protection from creditors and other litigants
-
Wealth enhancement as it creates tremendous trade advantages through the avoidance of capital gains and income taxes.
-
Preservation of wealth by ensuring that heirs are well provided for long after your demise, and facilitating the continuation of business activities, and the avoidance of probate, estate taxes and forced heirship provisions.
The great benefit of the trust is
that it allows the legal ownership of property to be distinguished and
separately vested from the enforceable rights of use and enjoyment of that
property. This makes the trust, particularly when established offshore, an
extremely flexible, sophisticated and creative instrument for asset protection,
tax, estate, and investment planning, and the preservation of confidentiality.
The three basic elements in a trust are the Settlor, the Trustee and the
Beneficiary. The Settlor is the creator of the trust and may be either an
individual, a corporation or another legal entity. The Settlor creates a trust
by transferring title to assets which he owns to another person or entity with
instructions that: those assets be held for the use and enjoyment of a third
party The entity to which legal title to the assets is transferred and who holds
those assets for the benefit of the third party is the trustee. The third party
for whose use and enjoyment the assets are held and managed by the trustee is
the beneficiary.
The trustee is under a legally enforceable obligation to exercise his
trust powers for the benefit of the beneficiaries, and not to put himself in a
position where his duties as a trustee conflict with his personal interests.
The beneficiary or beneficiaries may either be specifically named
individuals or may be sufficiently defined class of persons from among whom the
trustee is given a power to name specific individuals who are to benefit.
Trust may be either irrevocable or revocable. In the latter case the trust is
called a "grantor trust".
In the case of an irrevocable trust, the trust assets are not usually deemed
part of a deceased settler's estate, and passes to the beneficiaries without
probate or estate taxes
OffshoreSimple can assist in all aspects of trust formation. .
THE TRUSTS ACT, 1992
Belize, as a result of its 1992 trust law, now present the most modern and
flexible trust legislation in the world as the following review will illustrate:
The Trust
Under the Act, trusts may be created either by oral declaration or by written
instrument without any formalities or technical expressions. Unit trusts must be
in writing and trusts relating to land in Belize cannot be enforced unless they
are in writing.
The trust may state the proper law; if silent, then the law with which the trust
has its closest connection at the time of creation shall be the proper law. If
the law intended by the settlor or the law with which the trust has its closest
connection does not provide for the types of trusts involved, then the law of
Belize shall be the proper law.
Draftsmen may draw trusts with severability, and severable aspects of the trust
may be governed by laws of different jurisdictions. The trust may also provide
that the proper law or the law governing severable aspects of the trust may be
changed from one jurisdiction to another.
Importantly, where the proper law or the law governing a severable aspect of the
trust is changed to the law of Belize, the law of the old jurisdiction cannot
operate to make void or invalidate the trust or the functions of the trustee.
The converse also holds true. When the trust leaves Belize, the law does not
apply to the trust so as to impair it nor invalidate the functions of the
trustee.
Abolition of the Perpetuity Rule.
--------------------------------------------------------------------------------
The rule against perpetuities is abolished in relation to trusts. Non-charitable
trusts may be created for a maximum of 120 years. Charitable trusts may be
established with unlimited duration.
Asset Protection
--------------------------------------------------------------------------------
A high level of asset protection is achieved since a Belizean court cannot vary
or set aside a Belizean trust, nor recognize the validity of any claim against
the trust property, pursuant to the law of another jurisdiction or the order of
a foreign court in respect of marriage or divorce; succession or claims by
creditors in an insolvency. This provision insulates the assets of the trust
notwithstanding the law relating to fraudulent transfers, the Bankruptcy Act and
the Reciprocal Enforcement of Judgements Act which could ordinarily be used to
reach such assets.
Settlors, Beneficiaries and Purposes
--------------------------------------------------------------------------------
Any person having capacity to own and transfer property may be a settlor of a
trust. The settlor may also be the trustee or protector of the trust. The law
provides for the creation of spendthrift trusts and abolishes the rule that a
settlor may not be the beneficiary of a spendthrift trust. Both settlors and
beneficiaries may give to trustees letters of wishes to guide the trustees in
the exercise of their functions. Trustees may or may not have regard to the
letters, although no fiduciary duty is established merely by giving one to a
trustee.
Charitable trusts may be created for various purposes, including the relief of
poverty, the protection of the environment, the advancement of human rights and
fundamental freedoms, education and religion. A purpose may be regarded as
charitable whether it is carded out in Belize or not, and regardless of whether
it is beneficial to a community in Belize or elsewhere. Non-charitable purpose
trusts may also be constituted under the Act. Such trusts must provide for the
appointment of a protector, in default of which the Attorney General may appoint
one.
Protectors and Trustees
--------------------------------------------------------------------------------
Trusts may provide for a protector who may also be a settlor, trustee or
beneficiary. In the exercise of his office, a protector owes a fiduciary duty to
the beneficiaries or purposes of the trust, but he is not considered a trustee.
The minimum number of trustees is one with a maximum of four except for
charitable trusts, and a trustee may also be a settlor and beneficiary. Due
diligence, observance of utmost good faith, acting to the best of one's
abilities and skills, and the standard of care of a reasonable and prudent man
of business are required from all trustees.
Simple mechanisms are introduced for the removal and resignation of trustees.
The Act sets out in a schedule all the implied powers of trustees for clarity
and certainty. Interestingly, trustees engaged in any profession or business are
entitled to be paid their fees and charges for business and time spent in
connection with the trust. Also, corporate trustees are entitled to remuneration
agreed upon with the settlor or protector
Wide powers are given to trustees to advance moneys for maintenance and
education of minors and beneficiaries generally. Trustees are similarly
empowered to advance moneys to beneficiaries before their interest in the trust
has vested.
Breach of Trust
--------------------------------------------------------------------------------
Trustees are personally liable for loss, depreciation in value of trust assets
or loss of profits consequent on a breach of trust. However, in the case of a
corporate trustee the directors are not personally liable.
Persons who receive property or income with knowledge of breach of trust are
constituted constructive trustees thereof.
The usual powers of tracing are included and the periods of limitation and
prescription are removed for actions against trustees for fraud and recovery of
property.
Variant Trusts
--------------------------------------------------------------------------------
The Trusts Act permits a non-common law settlor to create a trust peculiar to
his law, religion or nationality. However, such an instrument must recite that
it is a trust, and it must be of type approved by the Attorney General by
publication in the Gazette for it to be governed by the Act.
Note: Any other
time spent on client's business will be billed as incurred. All out of
pocket expenses are fully recoverable.
Trust Formation services are
usually provided on a time cost basis of $100 per hour.
If we are involved in making substantial amendments to these Standard Trust Deeds, we charge an additional fee for such service at our normal time-cost rate. If the drafting of the Deed of Settlement is done by another party, we charge a $300 acceptance fee.
Transfer of Fees:
Please note the following instructions for international
wire transfers:
Available from Belize:
Whilst every effort has been made to ensure that the details contained herein are correct and up-to-date, it does not constitute legal or other professional advice. We do not accept any responsibility, legal or otherwise, for any errors or omissions.
Please go to our Uses of offshore Companies Page where you will find interesting information on the benefits of using offshore companies and trusts for business and personal use, links to information on other locations and details of our products and services.
