Belize Offshore Trust

 

In 1990, Belize entered the offshore scene with the enactment of new legislation creating the International Business Company or Belize Offshore Company, a refinement of the BVI model.  Other offshore legislation soon followed, and today Belize is one of the world's leading offshore financial centers.

 

Trusts and their Uses

 

The modern trust, accepted since the latter part of the sixteenth century, is derived from a form of trusts known as the “use system”.  This system allowed property to be transferred to T for the use and benefit of B (as was the case with monks who were forbidden to hold land; or a knight frequently out of the country having T manage his property in his absence).

 

A trust may be defined as a relationship which arises where property is vested in a person or persons called Trustees who are obliged to hold that property for the use and benefit of other persons called the Beneficiaries.  The person creating the trust and vesting the property is called the Settlor.  Trusts are used for a wide variety of purposes such as to:

 

- protect assets against litigation;

- protect assets from spendthrift beneficiaries;

- facilitate investments through a trust unit;

- preserve the family wealth, continue the family business, and control the destination of family property on death;

- benefit charitable institutions or organizations and to provide for non-charitable purposes;

- provide pension for retired employees and their dependents;

- enable land to be held by minors who themselves cannot hold legal estate;

- avoid probate, estate taxes and forced heir ship provisions upon death;

- avoid income and capital gains taxes and other burdensome taxes;

 

Belize Trusts

 

The Belize Trusts Act, 1992 is now the principal source of trusts legislation in Belize, and its enactment repealed and replaced the Belize Trusts Act, 1923.  The new legislation, considered perhaps the most modern trust legislation in the world, was drafted by a select team of trusts experts in London, with assistance of experts from Belize and the USA.

 

Creation of a Belize Trust

No formalities or technical expressions are required for the creation of a trust, provided that the intention of the settlor to create a trust is clearly manifested.

 

Trusts may generally be created by oral declaration, or by instrument in writing, by conduct, by operation of law, or in any other manner.  However, unit trusts must be created by an instrument in writing and trusts respecting land in Belize cannot be enforced unless evidenced in writing.

 

Proper Law of a Trust

The proper law of a trust shall be the law expressed by the terms of the trust or intended by the settlor.  If no such law is expressed or intended, the law with which the trust has its closest connection at the time of creation shall be the proper law.  If the law expressed by the terms of the trust or intended by the settlor, or which the trust has its closest connection at the time of creation, does not provide for trusts or the category of trusts involved, the law of Belize shall be the proper law.

 

The terms of a trust may provide for a severable aspect of the trust to be governed by a different law from the proper law of the trust, and for the proper law of the trust or the law governing a severable aspect of the trust to be changed from that of one jurisdiction to another.

 

Offshore “Exempt” Trusts

 

A trust shall be an exempt trust in any year if neither the settlor nor the beneficiaries are resident in Belize during that year, and the trust property does not include any land situated in Belize.

 

Belize Trust Advantages

 

Asset Protection

Where a trust is created under the law of Belize, the court shall not vary it or set it aside or 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 rights, or the claims of 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 Judgments Act, which could ordinarily be used to reach such assets.

 

Taxation

An exempt trust is exempt from the payment of all forms of local taxation; estate, inheritance, succession or gift tax or duty payable on death; and stamp duty payable on all transactions relating to such trusts.

 

Exchange Control

The trust property and all transactions carried out by the trustee of an exempt trust are not subject to exchange controls.

 

Confidentiality

Trustees are required to keep confidential all information regarding the trust property or trust administration (this obligation is subject to the provisions of the Act and to the terms of the trust).

 

Belize Trust Advantages . . .

 

Registration or Filing

A trust is valid in Belize only if it is registered. An application for registration must be accompanied by a certified copy of the instrument creating the trust and the required fee of US$100. A certificate of registration is issued.

 

Letter of Wishes

The settlor or beneficiaries may give to the trustee a letter of wishes or the trustee may prepare a memorandum of wishes of the settlor or beneficiaries.  The trustee may have regard to the letter or memorandum, but is not bound to have regard to either.

 

Perpetuity Rule Simplified

The rule against perpetuities shall not apply to trusts the proper law of which is the law of Belize.  Such trusts shall have a maximum duration of 120 years from the date of its creation and, additionally, the terms of the trust may authorize the accumulation of the income of the trust for a period not exceeding the maximum duration of the trust.  Charitable trusts may be established with unlimited duration.

 

Protectors of a Trust

The terms of the trust may provide for the office of protector of the trust who may also be a settlor, a trustee or a beneficiary of the trust.  In the exercise of his office the protector owes a fiduciary duty to the beneficiaries or purposes of the trust, but he is not to be regarded as a trustee.  Unless the terms of the trust otherwise provides, the protector has the power to remove a trustee and to appoint a new or additional trustee.

 

Schedule of Fees for Trusts

 

Drafting, execution and attending to registration US$

 

Vetting, execution and attending to registration US$

(if drafting is done by another party)

 

One time government registration fee US$

 

Annual fee – Trustee US$

 

Annual fee – ProtectorUS$

 

Any additional services provided or time spent on client’s business for matters other than that specified above will be billed as incurred at our regular rates for such services (normally US$150 per hour). Out of pocket expenses are fully recoverable.