A Private Trust Company (“PTC”) is, essentially, a company which possesses Trustee powers and which does not conduct trust business with the general public, its sole purpose being to act as a trustee of a family Trust or a group/series of related Trusts.
As long as certain criteria are fulfilled the PTC will not have to obtain a licence to carry out Trust Company business.
A PTC can be particularly useful for wealthy families who either do not wish to relinquish control to professional Trustees or where the Trust fund is to be invested in assets, which a professional Trustee may be reluctant to deal with, such as works of art or family businesses.
Key features:
- The board of the PTC may consist of family members or trusted advisors. The residence of the PTC’s directors may have an impact on the underlying Trust’s tax status so professional advice is recommended. Generally, a company is classed as being resident for tax purposes in the jurisdiction where mind, management and control are exercised. Care needs to be taken to ensure that the directors of the PTC are not deemed to be resident in a high tax jurisdiction;
- Representatives of the Trust company business are appointed to the board to ensure appropriate governance;
- The PTC may be owned in a variety of ways such as by a Purpose Trust or a Foundation for confidentiality purposes;
- The professional service provider acts as an administrator of the structure and assists the board of the PTC with corporate governance and trustee considerations.
Advantages:
Control – By retaining the power to appoint the directors of the PTC the Settlor (https://offshoreincorporate.com/faq/what-is-a-settlor/ ), whether or not a director themselves, will experience a high degree of control over how the Trust is run. The Settlor and his/her family have an opportunity to be involved in the management, investment and disposition of the Trust assets.
In Depth Knowledge – Allows family members and their advisors to bring their varied knowledge onto the Board. Particularly useful if the underlying assets are complex, high-risk or part of the family business.
Succession Planning – By engaging younger family members in the management of family assets, and involving them in the decision-making process, a training programme is instituted preparing the younger generation to effectively and responsibly manage wealth.
Diversity of Asset Base – Professional Trustees may be reluctant to hold certain assets therefore a PTC allows greater choice as to what investments may be made with the Trust fund.
Continuity – The administrator may change but the PTC will remain as the Trustee providing continuity of asset ownership.
Nevis Private Trust Companies
A Nevis Private Trust Company is free of regulation in Nevis. This means that a standard Nevis International Business Corporation can be a PTC and the Nevis International Exempt Trust Ordinance (NIETO) states that for a Nevis Trust to qualify as a NIETO Trust the following criteria must be met:
There must be at least one Trustee, which can be:
(i) a Corporation incorporated under the Nevis Business Corporation Ordinance, Cap 7.01; or
(ii) a Limited Liability Company formed under the Nevis Limited Liability Company Ordinance, Cap 7.04; or
(iii) a Trust company licensed in Nevis; or
(iv) an Attorney-at-law or firm of Attorneys-at-law duly licensed by the Nevis Island Administration to carry on the business of a registered agent; or
(v) a Multiform Foundation established and registered under the Nevis Multiform Foundations Ordinance, 2004;
As regards connection with Nevis:
- The Settlor and Beneficiaries must at all times be non-residents of St. Kitts and Nevis; and
- The Trust property must not include any land situated in St Kitts and Nevis.
The assets and income of a Nevis International Exempt Trust are exempt from all exchange controls and all forms of taxation and stamp duty in St. Kitts and Nevis.
Key Features of the Nevis model of PTC include:
- A Nevis Trust cannot be declared void, voidable or defective by reason of any forced heirship rules of the Settlor’s domicile;
- The rule against perpetuities does not apply. A Nevis Trust may continue for one hundred years from the date of commencement;
- Foreign Judgments against the Trust are not enforceable in Nevis. Any civil action to recover assets from a Nevis Trust must be brought anew in the Courts of the Federation of St. Kitts and Nevis.
- The Proper Law of the Trust is the Law of the jurisdiction expressed by the terms of the Trust; or failing that, with which the Trust at the time it was created had the closer connection; or failing either, then the proper law of the Trust shall be the law of Nevis.
Fraudulent Transfers
In most onshore jurisdictions if an asset is transferred to a third party purely to defeat a Creditor’s claim over it, that transfer can often be overturned. This transfer is referred to in the Legal world as a Fraudulent Transfer or a Fraudulent Conveyance or a Fraudulent Disposition.
Where an asset has been transferred to a Nevis PTC the sole remedy available to a Creditor is to allege fraudulent transfer or disposition. BUT if the Trust is settled after the expiration of 2 years from the date of the Creditor’s cause of action, it is not deemed fraudulent. In any event, a Creditor seeking to set aside a transfer to a Nevis Trust must prove beyond a reasonable doubt, and with clear and convincing evidence, that the transfer constituted a fraudulent disposition. Moreover, a Creditor must deposit with the Ministry of Finance, a security bond of US$100,000.00 before he/she can bring an action against a Nevis Trust;
Protectors
The Nevis Law also provides for the appointment of a Protector ( https://offshoreincorporate.com/faq/what-is-a-protector/ ) who is responsible for monitoring the operations of the Trust. This provision allows the Protector to ensure that the purpose of the Trust is fulfilled. One of the outstanding features of the Nevis Law is that the same person can act as Settlor, Beneficiary and Protector. This particular aspect allows the Settlor to maintain control over the Trust assets if desired.
Confidentiality
The Nevis Law also provides for there to be confidentiality with respect to the Trust. Though a Trust register is maintained, it only records the name of the Trust and the date of settlement and is not a public document available for inspection. The only exception is where a Trustee of a specific Trust gives written authorization allowing the inspection of the entry of that Trust on the register. Additionally, the Law provides that all non-criminal judicial proceedings relating to the Trust shall be heard in private and that no details may be published without leave of the Court.
Nevis PTC Costs
The cost to set up and maintain a Nevis PTC would be as follows:
First Year
Incorporation – US$400
Government registration charges – US$270
Registered office/agent – US$470
Compliance maintenance – US$150
Administration and collections – US$110
Annually thereafter
Government registration charges – US$260
Registered office/agent – US$470
Compliance Maintenance – US$150
Administration and collections – US$110
Registration
If you intend to engross and register A NIETO (Nevis International Exempt Trust Ordinance) Trust it will need to be registered to qualify under the ordinance and must have a registered office in Nevis (which OCI can/will supply). At registration the Registrar of Trusts is informed of:
- The name of the Trust
- The name of the Trustee
- The place of the registered office of the Trust; and
- The date on which it was engrossed
The Trust Deed (ie the document which governs the operation of the trust) is not filed and remains a private instrument.
The procedure for registering a NIETO Trust is as follows:
- We draft and provide the Trust deed to the Compliance Manager in Nevis for review to ensure that it qualifies as a NIETO Trust;
- Assuming that the deed qualifies the client then engrosses it and provides us with a signed deed;
- We register the Trust, obtain the registration certificate and provide it to the client.
Note: The Nevis PTC can be the Trustee of NIETO and non-NIETO Trusts without the need for licencing.
The costs relating to the establishment of a Nevis NIETO Trust would be as follows:
First year
Review of the Trust deed for compliance with NIETO – US$1,000
Provision of registered office – US$470
Due diligence maintenance – US$170
Administration and collections – US$110
(+ Providing a Trustee if required $1,750)
Annually thereafter
Provision of registered office – US$470
Due diligence maintenance – US$170
Administration and collections – US$110
(+ Providing a Trustee if required $1,750)
Would you like to know more? Then please Contact Us:
info@offshorecompaniesinternational.com
DISCLAIMER: OCI is a Company/Trust/LLC/LP/Foundation Formation Agency. We are not tax advisers or legal advisers. You are advised to seek local legal/tax/financial advice in regards to your local reporting/tax requirements before committing to set up or use an Offshore Company or other entity.
