Why a BVI Trust?
- The British Virgin Islands continues to be a popular jurisdiction to establish a trust because of its well respected Trust legislation based on English Trust Law.
- BVI trusts provide a means of holding assets confidentially, this is facilitated by the strong privacy laws in place which favour trust beneficiaries.
- Most BVI trusts are exempt from all taxes provided there are no beneficiaries resident in the BVI and that the trust does not conduct any business in the BVI or own any land in the jurisdiction.
- The key legislation governing BVI trust law is the Trustee Amendment Act 1993. The flexibility and privacy which the Act provides is seen as a major advantage for setting up a BVI trust. Under the Act all trust deeds, deeds of appointment relating to the terms of a trust; and all other deeds executed by trustees, settlors and beneficiaries are exempt from public filing and disclosure.
Types of BVI Trusts
The Amendment Act states that the Courts of the BVI will have jurisdiction in relation to a trust which needs no connection with the BVI other than it’s governing law is under BVI jurisdiction and hence regardless of where the trustees, settlor or beneficiaries are resident.
BVI trust law imposes fiduciary duties on trustees so that they may only benefit from the trust, and charge fees, to the extent that the trust instrument permits them to do so. Any additional benefits received from the trust are required to be passed onto the beneficiaries. Trustees are not permitted to deal with trust assets for their own direct or indirect advantage and must exercise all the powers vested upon them in the best interests of the beneficiaries.
Specifications for Trustees, Settlors and beneficiaries
Under BVI trust law, certain specifications relating to the parties involved in the trust must be satisfied.
WHO MAY BE A SETTLOR?
Any individual of sound and mind over 18 may be a settlor of a BVI trust. A company may also be a settlor subject to powers within the company articles.
WHO MAY BE A TRUSTEE?
Any individual of sound mind and over 18 may be a trustee to a BVI trust. A company may also be a trustee subject to powers within the company articles.
The settlor or any of the beneficiaries may be appointed as trustees, though beneficiaries should be aware of a potential conflict of interest.
WHO MAY BE A BENEFICIARY?
Any individual can be a beneficiary of a BVI trust, including unborn persons, minors and persons of unsound mind.
A settlor may also be a beneficiary and, as mentioned above, a trustee may be one of the beneficiaries.
Forming a BVI Trust
The creation of a BVI trust can be a simple and straightforward process. Forming a Trust requires the execution of a trust deed by the parties involved and the receipt by the trustees of some holding, which is often for convenience a nominal cash sum, upon which the trust can operate.