Trust

The concept of Trust is not a new one; in fact evidence of its use dates back to the time of the Romans. However, it was not until the 13^th Century that the notion of “common law trusts”, as we know it today, emerged. Trusts have become one of the dominant instruments to facilitate international finance. The reason for this is simple really, as every individual or company has a desire to protect, preserve and enhance their wealth, and the international financial services industry has presented itself as the principal means for realizing these goals.

The Belize Trusts Act is said to have been competitively structured incorporating sound asset protection provisions. It presents the most modern and flexible trust legislation in the world. Providing a high level of asset protection and abolishing the rule against perpetuities, the Belize Trust is extremely flexible, sophisticated and is a creative instrument for tax, estate and investment planning and the preservation of confidentiality.

Features

The most distinct feature of a Trust is the clear separation of the legal ownership (title) of the asset from the beneficial ownership of the asset. While the Trustee is the holder of the legal title to a Trust, the rights to the benefits and gains from the trust assets lie with the Beneficiary. Therefore, the legal ownership of property is distinguished and separately vested from the enforceable rights of use and enjoyment of that property.

The following additional features make the Belize trust an ideal vehicle for asset protection and wealth preservation:

• the English law against perpetuities does not apply
• the powers and duties of a Protector are set out
• the status of a Letter of Wishes is clarified
• Trustee appointment and removal provisions are flexible and allow for the appointment of a sole Trustee
• the law contains provisions to simplify the drafting of Trust documents
• the law also contains asset protection provisions so that a 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
• registration of the Trust is mandatory; however, particulars on the Settlor and Beneficiaries are not filed with the Trusts Registry
• both charitable and non-charitable Trusts are allowed
• non-charitable Trusts may have a maximum duration of 120 years
• Trustees may be given full discretionary powers

Throughout the years, the Belize Trust has been utilized for various types of structuring. However, the main reasons for establishing a Belize Trust include the following:

• Preservation of wealth
• Tax planning
• Estate planning
• Confidentiality
• Asset protection

Trust Comparison Table

Legislation

Following the successful introduction of the IBC Act, Belize not long thereafter, in 1992, passed the Trusts Act Chapter 202 of the Laws of Belize, Revised Edition 2000. The enactment of the Trusts Act provided immediate asset protection provision said to be one of the strongest in the IFS industry. The Act also sets out in a schedule all the implied powers of trustees for clarity and certainty. There are also wide powers given to trustees for the advancement of moneys for maintenance and education of minors and beneficiaries generally. The Act further contains provisions addressing breach of trust as well as provides for the settlement of Variant trusts, permitting a non-common law settlor to create a trust peculiar to his law, religion or nationality.

Since its enactment, the Trusts Act has been amended twice enhancing the structure and making it more attractive for use internationally. The first amendment, the Trusts (Amendment) Act, 2007 provides for compulsory registration of international trusts and the establishment of an International Trusts Registry. The second amendment, the Trusts (Amendment) Act, 2013 came into effect to make provision for the mandatory registration of all domestic trusts.

For a full version of the legislation governing the Belize Trust, please visit our Legislation page.

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FATCA Sponsor Service

To assist Belize trusts for which we act as the trustee in becoming FATCA compliant in the most efficient and effective manner, we have created a new FATCA Sponsor Service.  Our FATCA Sponsor Service is a complete FATCA solution for Belize trusts with income predominantly from securities—we perform all work necessary so that your Belize trust avoids the non-refundable 30% FATCA withholding tax.

To learn more about this service, click here.