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BRITISH
VIRGIN ISLANDS - TRUST
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Personal wealth is amassed in different ways. Whether inherited, earned
through successful business venture, or through investment planning, it
is prudent to consider a strategy to protect assets and wealth for the
future. The trust remains one of the most effective tax and asset protection
planning tools available today.
A
trust is created when a person (the settlor) transfers assets to a trustee.
The trustee will care for and dispose of the assets in accordance with
the Trust Deed and possibly a Letter of Wishes provided by the settlor.
The beneficiaries of a trust are the persons described in the Trust
Deed who may benefit from the trust.
Major Advantages
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By moving his/her assets to an offshore trust, the settlor
can divest him/herself of ownership of the assets. These assets
could be money, real property, company shares, movable or
immovable assets or even intellectual property rights.
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Confidentiality
and flexibility.
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In
many jurisdictions a trust deed is not registered with any
tax authority or government authority and is therefore a private
agreement between the parties.
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Normally
there is no requirement to file the accounts of a trust, nor
to have them audited by an independent auditor.
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Key
motivations and uses
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Wealth
protection for future generations
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Controlling
succession of ownership for family businesses and wealth
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Fear
that children or others may dispose of assets or manage them
unwisely
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Tax
planning
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Flexible
estate planning
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Avoiding
disruption on death
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A
settlor wishing to protect him/herself and his/her heirs from
unrest, political risks, and future claims
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The
British Virgin Islands (BVI)
The British Virgin
Islands trust law is founded on English common law principles and based
largely on the UK’s Trustee Act 1925. The BVI government is committed
to a modern regulatory regime and effective partnership with the private
sector. The Trustee (Amendment) Act, 1993 was enacted as a result of this
policy and substantially amended the Trustee Ordinance, 1961 to cater
for modern day practices and evolving client needs. The United Kingdom
Recognition of Trusts Act, 1987 which adopts the provisions of the Hague
Convention on the recognition of trusts is also part of BVI law.
Why
use the BVI to establish a trust?
Creating a BVI trust, combined with an underlying IBC, provides a vast
range of benefits. The two guiding principles of the BVI legislation
are protection of the trust’s interests and assets and facilitation
of its management and operations. The many benefits include:
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Protection of wealth and inheritance wishes.
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Protection
of trust interests.
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Protection
of privacy, exclusion from registration ensures confidentiality.
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Protection
from forced heirship laws and community property regimes.
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Rule
against perpetuities modified and provision for accumulation
and maintenance.
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Provision
for reservation of powers by the settlor.
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Duties
and role of the protector established.
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Facilitation
of user-friendly trust deeds.
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Facilitation
of comprehensive investment strategies.
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Facilitation
of a vast range of estate planning options.
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Facilitation
of the formation of charitable and non-charitable trusts.
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Facilitation
of swift, straightforward and cost-competitive operation.
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Broad
powers for the trustee to invest as he wishes.
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What
types of trust are allowed in BVI?
The crafted legislation
of the BVI provides for the trusts to be drafted in a way that will meet
a wide range of client requirements. They include:
• Revocable and non-revocable trusts
• Short-form or long-form trust deeds
• Full discretionary or fixed interest settlements
• Accumulation and maintenance settlements for minors
• Charities and protective trusts to remove future creditor risks
• Purpose Trusts
The Trustee
(amendment) ACT 1993
The main features of the Act are:
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Perpetuities
and Accumulations:
The perpetuity period can be fixed for a term not exceeding
100 years in place of the old fashioned common law "lives
in being". There area number of savings provision including
a "wait and see provision".
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Proper
Law and Jurisdiction:
If Proper Law is said to be the BVI the courts will require
no other connecting factor.
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Forced
Heirship Provisions:
Protecting dispositions from forced heirship laws in the settlor's
home county.
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Purpose
Trusts:
For any lawful purpose.
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Control
by settlor:
A Protector may be appointed and certain powers may be reserved
to the settlor.
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Taxation
and Registration:
The trustees, trust and non-resident beneficiaries are not
liable for taxes in the BVI.
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Authorized
Investments:
The trustees have broad powers of investment.
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Schedule
of Powers:
The Act includes a Schedule of Powers, containing those powers
typically found in offshore trusts, which may be incorporated
into the trust deed by reference.
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Amendment
to Trust Instrument:
Provided such power is expressed in the deed the trust may
be amended or revoked by the trustee or provide a flee clause.
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For
more information on trusts, please contact Maria M. Bashaw, Esq at maria.bashaw@intlca.com
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