Belize Offshore Express - Offshore, Immigration, Real Estate & Business Consulting - IBC,Retirement, Belize Trust, Offshore Banking

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

BELIZE OFFSHORE EXPRESS 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.