Belize Asset Protection Trust Benefits

Section 7 (6) of the Belize Trust Act.

1. 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 under the law of another jurisdiction or the order of a court of another jurisdiction in respect to-

• The personal and proprietary consequences of marriage or the termination of the marriage
• Succession rights (whether testate or intestate) including the fixed shares of spouses or relatives
• The claims of creditors in insolvency.

Section 7 (7) The Belize Trust Act further strengthens this provision:

Subsection (6) above shall have effect notwithstanding the provisions of section 149 of the law of Property Act, section 43 of the Bankruptcy Act and the provisions of the Reciprocal Enforcement of Judgements Act.

Summary.

Rather than including in the statute of limitations on fraudulent conveyance, limiting the time a creditor can bring a fraudulent transfer claim for assets placed into Trust, the attorneys who wrote the Belize Asset Protection Trust Act opted to eliminate the option of making fraudulent transfer claims entirely. Therefore, the assets are effectively protected once they are placed into the Belize trust, so instead of waiting to place the assets into the Trust 2-6 years before a possible challenge, as provided in other jurisdictions, the protection in Belize is immediate.

2. Creditor remedies such as fraudulent conveyance charges or the issuance of a Mareva injunction are specifically addressed and subsequently rendered powerless by Belizean Law. Bank Accounts: We recommend not attaching accounts to a Belize trust. The reason for this is that whilst assets are protected in the Trust unless the bank account is opened in Belize, and the account is in another jurisdiction, there is a danger that an order may be made against the bank, which is outside of the protection of the Belize trust. Currently, there are no good banks in Belize. However, that may change in the future. Therefore, we do not recommend holding cash deposits with the Trust.

Tax Planning: We do not recommend using a Belize Trust as a part of tax planning unless the client’s Accountants or Lawyers recommend such activities. We are not qualified to provide accountancy, tax, or legal advice and recommend that clients discuss such matters with their professional advisers. We are happy to discuss all aspects of your application with your professional advisers by prior arrangement.

A Trust is a specific legal relationship primarily known in the Common law. Using a Trust, the owner of certain assets (Settlor) transfers these assets to an independent other party (Trustee). The Trustee, in turn, is legally bound to maintain and manage these assets for the benefit of another person or group of persons (Beneficiaries).

DEFINITION The Trust is defined in section 2 of the Belize Trusts Act as follows:
A Trust exists where a person (known as Trustee) holds or has vested in him/her or is deemed to hold or have vested in him property which does not form or has ceased to form, part of his or her estate.

1. for the benefit of any person (known as the Beneficiary) whether yet ascertained or in existence;
2. for any valid charitable or non-charitable purpose which is not for the benefit only of Trustee

PARTIES TO A TRUST

The Settlor is the person who creates the Trust by placing a certain asset that s/he owns into the Trust, i.e. by transferring that asset to another person (Trustee) along with clear instructions that the asset be held for the benefit of a third party. The Settlor may be either an individual or a legal entity.

is the entity to which the Settlor transfers the legal title to the asset. While in full control of the trust assets, The Trustee is under a legal obligation to maintain the trust property in the best possible manner for the benefit of the Beneficiaries. The Trustee is legally precluded from using the trust asset for his own ends.

The Beneficiary is the third party for whose benefit and profit the trust asset is held and managed by the Trustee. The Beneficiary or Beneficiaries may be either specifically named in the Trust Deed or maybe a sufficiently defined group of persons (for example “all children and grandchildren”). As a particular twist, the Settlor of a Trust may also be named as the Beneficiary. The Trust may also be created for charitable purposes.

The Protector Is not a mandatory party to all Trusts but may be chosen by the Settlor. The function of the Protector is to supervise the Trustee, thus providing additional assurances to the Settlor that the trust assets are properly managed. In extreme circumstances, the Protector may remove or replace the Trustee. The function of the Protector may be undertaken by the Settlor or the Beneficiary, although usually, it is vested in a trusted friend or advisor of the Settlor.

ADVANTAGES AND APPLICATIONS OF THE TRUST

The main benefit of a trust is that it allows the formal ownership of an asset to be legally separated from the enforceable rights of beneficial use and enjoyment of that asset. Because of this characteristic, trusts are widely used for asset protection and estate planning.

An offshore trust (a Trust established in an offshore jurisdiction – like Belize International Trust) provides the additional benefit of no taxation.

Some of the most common applications of offshore trusts are as follows.

Asset Protection.

Assets transferred by the Settlor to a Trust no longer form part of the estate owned by the Settlor. Therefore, potential creditors of the Settlor do not have recourse to such assets. As the trust assets are not considered to be the property of the Settlor, the Settlor cannot be

indicted for not reporting or declaring such assets. For asset protection purposes, it is important that the Trust is established well in advance, ideally at a time when the Settlor could not even anticipate the existence of the future creditors. The Trust established to defeat existing creditors may be found to be fraudulent and, therefore, invalid.

Confidentiality.

As trust assets are not deemed to be the property of the Settlor, trusts are often used to hold assets that would otherwise have to be reported or declared by the Settlor in his country of residence. Trusts are widely used to hold shares in an IBC or in other offshore assets where true ownership must be kept away from public scrutiny. This way, a legal additional level of confidentiality is provided for any offshore-based.

Estate planning and probate avoidance.

In most jurisdictions, the estate of a deceased must go through a probate procedure. This may be a lengthy and costly process, also involving undesired publicity during the estate distribution. By establishing a trust, the probate can largely be avoided, because the ownership to the trust assets has been transferred during the life of the Settlor. Hence, the death of the Settlor does not influence the Trust’s assets in any meaningful way, and the Trust continues an uninterrupted operation for the benefit of the beneficiaries after and beyond the demise of the Settlor. Through a trust, a person may lay precise plans for providing a source of income for his remaining family, making provisions for children’s education or emergency situations in the family. A trust is arguably the most appropriate and flexible instrument for making arrangements of this kind.

Avoidance of forced heirship.

For various reasons, an individual may not wish his property to pass outright to his heirs and may wish to make other arrangements instead. However, in many countries, the law does not permit a person to freely dispose of his property in the event of his death. Rather, the law may prescribe that certain heirs (usually, the closest blood-relatives) may not be excluded from inheritance and must receive a predetermined minimum share of the estate – even if the deceased would not have wished them to receive anything. As trust property will not be deemed part of the Settlors’ estate, such property will not be subject to any such forced heirship rules. In essence, a Trust may essentially fulfil the function of a last will, without being subject to onerous regulations.

Estate planning and long-term preservation of assets.

An individual may wish to ensure that the business built, or the wealth accumulated over a lifetime is not divided among the heirs and consumed irresponsibly but retained to accumulate further, with provision for payments to immediate family members as needed. If the shares in the business are transferred to the Trustees prior to the death of the owner, the Trust can be used to prevent the unnecessary liquidation of a family Company. The terms of the Trust Deed may then include detailed provisions for payments to be made to members of the family from dividend income received by the Trustees.

QUALIFICATION FOR A BELIZE INTERNATIONAL TRUST (“OFFSHORE TRUST”)

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

1. the Settlor is not a 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 case of a purpose trust, the purpose or object of the Trust is to be pursued or performed outside of Belize.

As opposed to domestic trusts under the Belize Trusts Act, which do not require a written

form and official registration to be valid, International Trusts must be in writing, properly filed and registered with the Registrar of International Trusts in Belize.

The following information is registered and maintained by the Belize Registrar of International Trusts in respect to every International Trust:

1. Name of the Trust;
2. Date of the settlement of the Trust;
3. Date of registration of the Trust;
4. Name of the Trustee;
5. Name of the Protector (if any);
6. Name and address of the trust agent.

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

Notably, the Registry does not require the Trust Deed itself to be filed, nor does it require revealing any details whatsoever about the settlors and beneficiaries of the Trust, nor any information about the trust assets.

An International Trust is registered in Belize by means of the Trust Agent filing a specific application form and affidavit, following which the International Trust is issued with a numbered certificate of registration.

Fees: The first year Trust set up cost is £3750.00. If you wish to use a Company to act as Trustee to your Trust their is an additional cost of between £2250.00 – £3750.00 depending on the chosen offshore jurisdiction.

While remaining sufficiently confidential and simple, the procedure of mandatory registration of International Trusts in Belize ensures that the interests of the would-be settlors and beneficiaries of the Trust are best served by providing them with a written confirmation that their International Trust has been properly established in accordance with a certain set of legal standards. This way, the official registration basically provides an additional assurance of the enforceability and integrity of the International Trust.

REGULATION OF TRUST FIRMS IN BELIZE

The Belize International Financial Services Commission (pursuant to the International Financial Services Commission Act, Chapter 272 of the Laws of Belize, licenses and supervises Trustees in Belize).

All practitioners in the offshore industry, including Trustees, must be licensed by the Commission before engaging in international financial services. The Commission is the regulatory body for the offshore sector and has developed a rigorous set of criteria that an applicant must satisfy before being licensed. In particular, any trust firm must prove a high staff competence and integrity standard, have an adequate internal system of controls and procedures, and be substantially capitalised.

Our trusts are formed and administered by a Belize licensed and registered agent in Belize.

Belize Asset Protection Trust Fee Schedule.

CONTACT INFORMATION

By email to: charles@charlesfarran.com

Telephone: + 44 (0) 771 9755664

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