Belize, formerly British Honduras, officially promotes the establishment of offshore asset protection trusts. It gained its independence from the United Kingdom in 1981 and has a judicial system based on that of the United Kingdom. English is the principal language and the country allows unrestricted inflow and outflow of capital. As of 1992 Belize was serviced by four Banks (two of which were international) and had 350 registered foreign companies. It just commenced the registration of trusts in late 1992. Since that time its asset protection business has slowly and steadily grown.
The Belize Trust Act was enacted in 1992. This is a comprehensive and well-conceived act which in section (6) provides that “the Court shall not vary [a trust settled under Belize law]…or set it aside or recognize the validity of any claim against the trust property pursuant to the law of another jurisdiction or the order of a court of another jurisdiction…over claims of creditors in an insolvency.”
We believe Belize is an excellent jurisdiction for the settlement of an asset protection trust. The fees are moderate, communication excellent and the jurisdiction has not been sullied.
Bermuda has enacted The Trusts (Special Provisions) Act 1989 which became effective January 31, 1990. Section 11 of this Act provides in part that where “a trust is validly created under the law of Bermuda the Court shall not vary it or set it aside pursuant to the law of another jurisdiction in respect of…the protection of creditors in matters of insolvency…unless the law of Bermuda has corresponding laws or public policy rules.”
This Act also permits a schedule of statutory boilerplate to be easily incorporated into a trust by a simple reference. Bermuda like a number of its neighbors has a substantial history of professionally dealing with offshore trusts. Normally, a Bermuda court will not assume jurisdiction to enforce a judgment against the United States settlor of an asset protection trust unless the settlor is resident in Bermuda. Bermuda permits the formation of private trust companies to serve as trustee of an asset protection trust. The stock of this company may be owned by the settlor’s family members or a trust set up for this purpose. It is thought that by using private trust companies the settlor has firmer control without actually holding the power to remove and appoint trustees.
As a condition to forming a private trust company the names and addresses of its beneficial owners must be disclosed to the Bermuda Monetary Authority which treats such information as confidential.
The British Virgin Islands, which currently follows common law rules for the regulation of trusts, with its history of financial and political stability is even now a very desirable situs for asset protection trusts even though its laws do and will provide less protection from direct attack than certain other jurisdiction. As a matter of interest, British Virgin Island corporations are often preferred when a corporate entity is required since they can be formed relatively quickly and cheaply. Bearer shares are permissible, thus permitting strict confidentiality.