Often we are asked what Jurisdiction/Product offers the best Asset Protection Features?
The most popular solutions in this regard include the Seychelles Foundation, Belize Trust Cook Islands Trust and Nevis Multi form Foundation.
Here’s a summary of the features of each:
Once an asset is transferred to a Seychelles Private Interest Foundation (“PIF”) the Foundation is deemed to be both legal AND beneficial owner of that asset. The Foundation Founder and beneficiaries have no legal OR beneficial interest in that asset.
The application of foreign laws (including forced heirship provisions) is specifically excluded.
A transfer of assets to a Sey PIF can only be attacked if a creditor proves that the person transferring assets to the Foundation INTENDED to defraud the creditor – in terms of evidence that is a VERY tough onus of proof.
Such a claim can only be brought within 2 years after that its 100% statute barred.
Seychelles law specifically notes that it does not recognize the judgments of any foreign Courts
The Belize Trust
Generally speaking, when an asset is transferred to a Trust purely to defeat the claims of a creditor such a transfer can be set aside by court order as a “fraudulent conveyance”. Belize is one of the few countries, if not the only country, where immediate protection is available against proceedings for fraudulent conveyances.
There is no minimum period of time for which the Trust must be established before it cannot be attacked. Unlike trust legislations in other offshore jurisdictions – which simply reduce the period of limitation for initiating proceedings for fraudulent conveyances or transfers – the trust law of Belize has actually repealed the provisions against fraudulent conveyances in relation to a trust. Such protection is immediate and (while it can be set aside for duress, fraud, mistake, undue influence, misrepresentation or incapacity of the settlor), the transfer of property/assets to a Belize Trust cannot be set aside even if made for the avoidance of claims by spouses, heirs and creditors.
As provided for in Article 7(6) of the Belize Trusts Act, where a Trust is created under the laws of Belize, the Court shall not vary it or set it aside or recognise the validity of any claim against the trust property pursuant to the law of another jurisdiction or the order of a court of another jurisdiction in respect to – (a) the personal and proprietary consequences of marriage or the termination of marriage, (b) succession rights (whether testate or intestate) including the fixed shares of spouses or relatives, or (c) the claims of creditors in an insolvency.
Belize law says foreign judgments are not recognized.
Cook Islands Trust
In Cook Islands they have limited to the ability of a creditor to set aside a trust.
The only way the transfer of assets to a Cook Islands Trust can be set aside is:
Where a creditor proves that an international trust was settled:
(a) with the principal intent of defrauding a creditor, and
(b) the settlement rendered the Settlor insolvent or without property by which the creditor’s claim could have been satisfied;
There are also limited grounds to set aside the Trust. If a claimant proves (a) and (b) above the Trust is not void or voidable but, rather, the Trust is liable to satisfy the claim of the creditor out of property, which, but for the settlement, would have been available to the creditor.
An international trust and a disposition to a trust is not deemed to be fraudulent against a creditor of a Settlor:
- if the settlement or disposition takes place after the expiry of 2 years from the time the creditor’s cause of action arose; or
- the creditor fails to bring his action before the expiry of 1 year from the date of such settlement or disposition; or
- the settlement or disposition takes place before the creditor’s cause of action arose.
Any claim must be brought within 12 months of the asset transfer.
Cannot be rendered voidable by reference to any foreign law.
Legal claims can only be brought in Nevis.
Claimant must prove “beyond all reasonable doubt” that the purpose of the transfer was to defeat a creditor = a VERY strong onus of proof.
The Foundation is only liable to the value of the property that should have been made available to the defrauded creditor.
The Foundation cannot be set aside if such a claim is proved – only damages are payable.
Downside: Nevis Foundation requires a minimum endowment of $US10,000 (which can be in assets or $).
To set up a Seychelles Foundation with OCI would cost $1,600 (+ $300 for a Nominee councilor + $400 for a Nominee Founder – it would be advisable to deploy both of these, for tax planning reasons). From 2nd year $715 + a Nominee Councillor (if required).
To set up a Belize Trust would cost $2,500 and from 2nd year $1,990.
To set up a Cook Islands Trust would cost $5,500 and from 2nd year$3,990.
To set up a Nevis Foundation will cost $3,500 (+ $300 for a Nominee councilor + $400 for a Nominee Founder – it would be advisable to deploy both of these, for tax planning reasons). From 2nd year $1.450 + a Nominee Councillor (if required).
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