Offshore Trusts - The Belize Offshore Trust

Belize established a modern Belize Trust Act in 1992 generally regarded as incorporating the best features of similar laws prevailing in other major offshore jurisdictions such as Cayman, Panama and Bermuda. With the benefit of hindsight, the Belize Trust Act represents the ultimate refinement of this type of legislation and is thus regarded as one of the most advanced instruments of its kind in the world.

Trusts can be established either by oral declaration or by written instruments without any cumbersome requirements or legal expressions. However, unit trusts must be formal written documents and trusts that pertain to property in Belize are unenforceable unless they are written instruments.

A critical advantage of Belize Trusts is that the original is prepared in English and drafted in conformance with English common law which is the foundation of all laws in Belize. Other jurisdictions need to prepare the trust in their official language, and then undergo potential pitfalls in translation. Furthermore, unlike some Caribbean islands that are still colonies, Belize as an independent nation is not subject to pressure from a mother country in guaranteeing the confidentiality and integrity of its offshore instruments.

Benefits of a trust include: Shield from creditors and other litigants Wealth enhancement by creating trade advantages through the avoidance of capital gains and income taxes. Preservation of wealth by ensuring that heirs are well provided and facilitating the continuity of business activities, and the avoidance of probate, estate taxes and forced heirship provisions.

Structure Of An Offshore Trust

There are three basic structures in a trust - the Settlor, the Trustee and the Beneficiary.

The Settlor creates the trust and can be an individual, a corporation or another legal entity. The Settlor creates a trust by transferring title to assets which he or she owns to another person or entity with instructions that the assets be held for the use and enjoyment of a third party.

The entity to which legal title to the assets is transferred and who holds those assets for the benefit of the third party is the Trustee.

The third party for whose use and enjoyment the assets are held and managed by the trustee is the Beneficiary.

Protection of Assets

Belize Offshore Trusts formed under our law are highly secure since a Belizean court cannot set aside or vary a Belizean trust. No Belize Trust has ever been compromised. A court cannot entertain any claim against the trust property emanating from the order of a foreign court regarding marriage or divorce, or succession or claims by creditors in an insolvency.

This is one of the strongest pillars upholding the Belize Trust and serves to shield the assets of the trust despite any laws relating to fraudulent transfers, bankruptcies or reciprocal enforcement of judgments laws which litigation-happy attorneys would otherwise use in an attempt to attach assets.

Settlors and Beneficiaries

The settlor of a trust can be any individual capable of owning and transferring property. The settlor may also be the trustee or protector of the trust. The law provides for the creation of spendthrift trusts and abolishes the rule that a settlor may not be the beneficiary of a spendthrift trust. This is an important element that is lacking in much weaker trusts existing in other jurisdictions, for example the USA, where spendthrift trusts are not possible. Settlors and beneficiaries may give to trustees memoranda of wishes to guide the trustees.

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