A Trust is an arrangement (not unlike a contract) between three persons, the Settlor (ie the person who sets up the Trust), the Trustee (ie the person who manages the Trust and its property) and the Beneficiary or beneficiaries (ie the person or persons who are intended to ultimately benefit from the Trust). Trusts offer tax deferral possibilities plus protection against potential creditors, financial or political instability and much more.

 

The Belize Trust legislation offers some of the most flexible and robust features available anywhere today. These include:

• The English law against perpetuities does not apply
• The powers and duties of a Protector are clearly defined
• The status of a Letter of Wishes (ie the Settlors instructions to the Trustees on how to manage the Trust) is clarified
• The Trustee appointment and removal provisions are flexible and allow for the appointment of a sole Trustee
• Anyone can be the Trustee
• The law contains provisions to simplify the drafting of Trust documents
• Outstanding asset protection provisions which ensure that a Belize Trust may not be set aside on the basis of claims from creditors or the order of a foreign court on account of divorce, bankruptcy, etc.
• Prospective Settlors may create protective Trusts in their own favour
• Other types of Trusts may be recognized (e.g. the Islamic Waqf and the Chinese Family Settlement)
• Registration of the Trust is optional
• Both charitable and non-charitable Trusts are permitted
• Non-charitable Trusts can survive for up to 120 years
• Trustees may be given full discretionary powers
• Purpose Trusts are permitted (ie where there are no named beneficiaries ie the Trust is set up to facilitate a particular purpose)

 

BELIZE TRUSTS OVERVIEW

An International Trust can be registered in Belize under the Trusts Act of Belize via a Belize Licensed Trust Company. To qualify as an “International” Trust, the beneficiaries must at all times be “non-resident” in Belize as defined in Section 2 of the Trusts Act of Belize. 

 

REGISTRATION OF BELIZE TRUSTS

There is no mandatory requirement to register a Trust in Belize; however, registration is possible with the General Registrar in accordance with Belize law. The application must be accompanied by -

 

·        A certified copy of the Trust Instrument;

·        A fee of BZ$200 (which is US$100).

 

On receiving the above, the Belize Registrar:

(a)   enters into the Register of Trusts the name of the Trust, the name of the Settlor & the Purpose of the trust (if applicable), and  then

(b)   issues a certificate of registration to the trustee.

 

That fee stated above is a one-time fee payable upon application for Registration.  It is not an annual fee.

 

 Key Features of the Belize Trust:

 

• EXEMPTION FROM TAXATION

A Belize trust is not liable to pay tax in Belize and there is no requirement to file any returns, reports, or records, provided that: 

·        The Settlor is not resident in Belize,

·        None of the beneficiaries are resident in Belize, and

·        The Trust property does not include any land situated in Belize.

• MODIFICATION OF COMMON LAW RULES

The Belize Trusts Act alters the common law rules relating to: 

·        The rule against accumulations;

·        The rule against perpetuities, removing the perpetuity period;

·        The rule against double possibilities;

·        The rules restricting the extent of charitable purposes;

·        The rules against purpose trusts.

• REVOCATION

A Belize Trust can provide for an express power of revocation otherwise it will be deemed to be irrevocable.

• RETENTION OF CONTROL AND BENEFITS BY SETTLOR

A Belize Trust shall not be declared invalid nor a disposition (ie a transfer of property) declared void or affected in any way if the Settlor retains or acquires:

 

·        a power of revocation of the Trust;

·        a power of disposition over Trust property;

·        a power to amend the Trust deed;

·        any interest in the Trust property.

• HEIRSHIP RIGHTS

A disinherited heir cannot challenge a Belize Trust on the basis that it interferes with his or her right to succeed to assets or property.

• SPENDTHRIFT BENEFICIARY

A Belize Trust can provide that an interest in property given to a beneficiary for life or a lesser period shall/can not (a) be alienated or passed from the Trust by bankruptcy or (b) taken in execution by process of law.

• BANKRUPTCY

A Trust is not void or voidable in the event of the Settlor’s bankruptcy, notwithstanding any law of the Settlor’s domicile or place of residence and notwithstanding that the Trust is voluntary, without valuable consideration and made for the benefit of the Settlor, the Settlor’s spouse or the Settlor’s children.

• FRAUD

The Court (in Belize only) has the power to declare a Trust invalid, but does not have the power to vary or set aside the Trust where there is a claim by a creditor upon insolvency. This applies even in the face of legislation such as the Statute of Elizabeth and Reciprocal Enforcement of Judgments. The result of the foregoing is that once a Trust is settled under the laws of Belize, it is deemed not to be fraudulent.

• GOVERNING LAW

A term of a Belize Trust expressly selecting the laws of Belize to govern the Trust is valid, effective and conclusive regardless of any other circumstances.

• FOREIGN JUDGMENTS

Foreign judgments are not enforceable against a trust settled under the laws of Belize. Any claimant must commence new proceedings in Belize, subject to Belize law.

• EXCLUSION OF FOREIGN LAW

A Trust governed by the laws of Belize cannot be declared or considered void (and nor can – in the case of a disposition of property/assets -any disposition be set aside or rendered defective) by reason (a) that the law of a foreign jurisdiction prohibits or does not recognise the concept of a Trust, (b) or that the laws of the Belize are inconsistent with any foreign law.

• COMMENCEMENT OF PROCEEDINGS

Any proceedings to set aside the settlement of a Belize Trust or disposition to such Trust must be commenced in the Supreme Court of Belize.

• STATUTORY RIGHTS OF DELEGATION

A Trustee has a statutory right to delegate its powers and functions, such as management of Trust property, including investment management, and to employ professionals to act in relation to the affairs of the Trust.

• CUSTODIAN AND ADVISORY TRUSTEES

A Custodian Trustee may be appointed to hold Trust property and an Advisory Trustee can be appointed to advise the Trustee in relation to the Trust property.

• GUARANTEE AGAINST EXPROPRIATION

The Belize government guarantees that there will be no compulsory acquisition or expropriation of Trust property except in accordance with due process of law.

A Belize International Trust and its trust property is permanently exempt in Belize from having to pay income tax, business tax, estate tax, inheritance tax, succession tax, stamp duty or gift tax. Additionally, the trustee of a Belize International Trust is regarded as non-resident in Belize and is exempt from exchange control with regard to the trust property and to all transactions carried out by the Trustee on behalf of the Trust.

As defined by the Belize Trusts Act, an “International Trust” or “Offshore Trust” is a trust where:

1. The Settlor is not resident in Belize;
2. None of the beneficiaries are resident in Belize;
3. The trust property does not include any land situated in Belize;
4. The law of Belize is selected as the proper law of the trust ; and
5. In the case of a purpose trust, the purpose or object of the trust is to be pursued or performed outside of Belize.

 

Unlike domestic trusts under the Belize Trusts Act (which do not require a written form and official registration to be valid) a Belize International Trust must be in writing, and (to ensure legal recognition) the fact of the creation of the Trust should be registered with the Registrar of International Trusts in Belize.

 

When a Belize Trust is registered only the following information is filed in the Public Record:

 

1. The name of the trust;
2. The date of settlement of the trust;
3. The date of registration of the trust;
4. The name of the trustee;
5. The name of the protector (if any);
6. The name and address of the trust agent.

 

The purpose of the trust may also be stated in the application, but is not mandatory.

 

A copy of the Trust Deed does not have to be filed; nor is it compulsory to file in the public record:

 

(a)   The Trust settlors details

(b)   The Trust  beneficiaries’ details

(c)    Any information about the trust assets.

 

An International Trust is registered in Belize by way of the Trust’s Belize Registered Agent filing a registration application form and affidavit.  Within days the International Trust is given a registered number plus a certificate of registration.

 

While remaining impressively confidential and simple, the procedure of registration of International Trusts in Belize ensures that the interests of the settlors and beneficiaries of the trust are well served by virtue of them being provided with written confirmation of their Belize Offshore Trust having been properly established in accordance with a certain set of legal standards. Moreover, the official registration provides legal assurance of the enforceability and integrity of the Trust.

 

The Belize Trusts Act contains substantial confidentiality provisions in respect to all Offshore Trusts registered or created in Belize. Additionally the Act includes a number of provisions under which the Settlor, the Beneficiaries and the Protector of the Trust may obtain pertinent information as regards the state of affairs of the Trust.

 

Subject to limited exceptions as provided in the Belize Trusts Act and subject to the terms of the trust, the Trustee of a Belize Trust must keep confidential all information regarding the state and amount of the trust property or the conduct of the trust administration. {Chapter 28.(2) of the Act.}

 

At the same time, a Trustee of a Belize Trust is bound to provide full and accurate information as regards the state and amount of the trust property and the conduct of the trust administration to (a) the Court; (b) the Settlor or Protector of the Trust; (c) in the case of a Trust established for a charitable purpose, to the Attorney General; (d) any beneficiary of the trust who is of full age and capacity (subject to the terms of the trust); and (e) any charity for the benefit of which the trust is created (subject to the terms of the trust).

 

As regards International Trusts registered by the Belize Registrar of Trusts (save for certain exemptions in the case of criminal investigations), the Registrar cannot disclose any information contained in the Register to any person without a written authorisation of the Trustee or the Trust agent.

 

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.

 

Additionally, the reciprocal enforcement of judgments legislation does not apply to a trust in Belize so that fresh proceeding would need to be brought in Belize in every instance involving a Belize trust.

 

The primary document for the establishment of a BelizeTrust is the Trust Deed.

 

The Trust Deed (or “Deed of Settlement” or “Declaration of Trust”) is an enforceable written legal instrument which sets out in detail the duties of the Trustee, the names of the Beneficiaries and the assets which are to be the subject of the Trust. The Trust Deed may contain all the necessary detail of confidentiality provisions together with details in regards to how the trust assets are to be maintained/managed and how any of the trust benefits must be distributed, invested or administered.

 

In order to qualify for the tax exemption, a Belize International Trust must correspond to certain limitations and rules, as prescribed by the Belize Trusts Act. In particular, every deed of settlement (Trust Deed) creating an International Trust in Belize must be signed by the Settlor and the Trustee, and every declaration of trust must be signed by the Trustee, and such signatures, if made outside Belize, must be authenticated before a notary or other authority authorised by the law of that jurisdiction to administer oaths.

 

A Belize International Trust is not required to have a Belize-based Trustee. However, in order for the trust to qualify as a Belize International Trust, Belize law must be selected as the governing law for the trust, and a licensed Trust Agent in Belize must be appointed. (OCI can and will provide or arrange both the services of the Trustee and of the Trust Agent for your Belize Trust).

 

In order to satisfy the requirements of the law, the Trust Agent in Belize must maintain on its file the following (confidential) information:

 

Name of the trust.
Date of settlement of the trust.
Date of registration of the trust.
Name(s) of the trustee(s).
Name of settlor.
Name of protector (if any).
Names and addresses of all the beneficiaries.
Initial funds settled.
Additional funds settled.
Changes in beneficiaries.
Change of protector.
Original trust instrument (Trust Deed) and any amendments thereto.

 

Once these details have been compiled, the Trust Agent in Belize proceeds to file an Application for the Trust to be registered as Belize International Trust plus an affidavit verifying that all the information required to be kept by the Trust Agent (as listed above), is duly held and placed on record in the Trust’s Belize Registered office.

 

I’ve been forming Offshore Trusts for close to 15 years. I’ve noticed growing interest in the Belize International Trust Product of late in preference to other Trust Jurisdictions.

 

Hopefully the above article helps to explain why!

 

As always local laws can have an impact. Hence you should seek local legal and financial advice before committing to form a Belize Trust.