A Grenada International Trust was developed especially for foreigners with assets held outside of Grenada to provide an asset protection and estate planning platform. The can also be used to set up retirement and pension funds
The International Trusts Act of 1996 (amended in 2001 and 2008) governs all international trusts in their formation, execution, and termination. This Act is based upon English common law, but modernized for better asset protection.
Background
Grenada is a former British Colony granted independence in 1974. It is a country consisting of seven islands located in the South Eastern Caribbean Sea near Trinidad and Tobago and Venezuela.
It democratically elects a two house parliament (senate and a house of representatives) with a prime minister.
Trust Benefits
A Grenada International Trust has the following benefits:
• Foreigners can Create Trusts: Foreigners are allowed to create international trusts along with foreign beneficiaries and trust assets located in other countries.
• Tax Free: No taxes are imposed on the trust or the income and assets received by the beneficiaries. However, U.S. taxpayers and all others paying taxes on their global income must report all income to their governments.
• Privacy: International trusts do not have to register with the government.
• Confidentiality: No one can disclose any information about an international trust without authorization. The penalties for violating confidentiality are severe.
• Fast Formation: International trusts can be formed in one day.
• Fraudulent Conveyances Difficult to Claim: A creditor must prove intent to defraud and under valuing property in order to use fraudulent conveyance.
• Foreign Laws Not Followed: Grenada does not allow foreign laws and court orders to interfere with international trusts and their assets.
• Asset Protection: As a result of the above two benefits, this is a superior asset protection structure.
• Estate Planning: Foreign laws regarding heirship and forced succession do not apply making this an excellent estate planning tool.
• 120 Years Duration: International trusts can have a 120 year lifespan.
• Protector: The settlor can appoint a protector to oversee the trustee.
• English: As a former British Colony, Grenada’s official language is English.
Trust Name
As long as the trust is not named after an existing legal entity in Granada or resembling one, a trust can use a name in different foreign languages. However, the trust must end with the word “Trust”.
Registration
International trusts do not have to register with the government. They can remain private. However, if an international trust is registered with the Authority, all records will remain private and not accessible to the public.
Duration
The maximum lifespan of an international trust is 120 years according to Grenada’s Rule Against Perpetuity law.
Spendthrift
Grenada international trusts can be created as spendthrift trusts. This means that the trust is formed to benefit a person unable to control his or her spending habits. This protects the beneficiaries from foolishly spending all of the trust’s assets. In order to achieve this, the trustee is given full authority to decide how trust assets and funds are spend on the behalf of the beneficiaries.
Foreign Laws
Every international trust established in Grenada shall not be void, set aside, or considered defective, and the settlor’s capacity shall not be questioned by:
• The laws of any foreign jurisdiction which does not recognize the concept of a trust; or
• The trust avoiding any interests, rights, or claims of any person either by heirship or personal relationship to the settlor conferred by any foreign laws; or
• Contradicts any foreign laws or foreign administrative or judicial order or action intending to recognize, enforce, or protect any rights, claims, or interests of persons mentioned above.
What this means is that Grenada will not recognize other countries laws or court orders where the foreign country does not recognize the legitimacy of trusts, or claims made by foreigners contending rights to heirship or personal relationship rights to trust assets.
Fraudulent Conveyances
Fraudulent conveyances of assets to the trust can only be set aside as voidable if a creditor can prove that the settlor had the intent to defraud and undervalued the assets when transferring them to the trust.
This places a heavy burden on creditors claiming fraudulent conveyance by having to prove both the intent to defraud and the under valuing of the assets when the transference to the trust was made. For instance, if the settlor discloses the actual value of the assets when the transfer took place while having the intent to defraud creditors, the transfer will not be voidable.
Settlor
The settlor can be a citizen and residing in any country.
Trustee
There is a minimum requirement of one trustee and a maximum of four. Trustees can be residents of any country.
Grenada offers licensed trust companies to provide trustee services. The Act defines licensed trust companies to be a “designated person”.
Trustees have the following duties:
• Act in good faith;
• Act with due diligence;
• Act in the best interests of the beneficiaries with the best abilities and skills;
• Exercising the standards of the care of a prudent and reasonable business person;
• Follow the provisions of the Act and terms in the trust;
• Act as a fiduciary;
• Preserve and in a reasonable manner enhance the trust properties value;
• Unless the terms of the trust provide otherwise or a court order is issued, a trustee will not derive any profit, enter into a transaction with anyone resulting in a profit;
• Keep accurate records and accounts of the trust; and
• Separate all trust properties from his or her own properties and maintain a separate identifiable record from other trusts’ properties.
Beneficiaries
The beneficiaries can reside and be citizens of any country.
Protector
The protector can be a national and resident in any country.
According to the Act, a protector can remove and appoint trustees unless the trust documents provide differently.
The protector can be the settlor or a beneficiary, but not a trustee of the trust. More than one protector can be appointed and all decisions must be by a majority vote.
Confidentiality
Grenada imposes harsh penalties on anyone disclosing any information regarding and international trust without authorization or by a court order. The penalties for violating the confidentiality of an international trust is a fine of $100,000 and/or imprisonment for two years.
Beneficiaries have the right to receive all information regarding their trusts without violating this law.
Taxes
Because the settlor, the protector, and the beneficiaries are not citizens or residents of Grenada and none of the assets are held inside Grenada, the trust is totally exempt from all taxes. This includes income taxes, corporate taxes, capital gains taxes, transference taxes, duties, gift taxes, wealth taxes, withholding taxes, estate taxes, and inheritance taxes.
Non-resident beneficiaries receiving income from an international trusts are exempt from paying income taxes. However, U.S. residents and anyone residing in a country taxing all worldwide income must disclose all income to their governments.
Public Records
Since international trusts do not have to register with the government, there are no public records containing any information regarding trusts. However, if an international trust decides to register with the Authority, all records remain private and are not accessible to the public.
Time to Form
An international trust can be formed in one day depending on the one preparing the legal documents.
Conclusion
A Grenada International Trust enjoys the following benefits: 100% ownership; no taxes, confidentiality, privacy, fast formation, a protector, difficulty proving fraudulent conveyances, foreign laws not followed, asset protection, estate planning, 120 year lifetime, and its official language is English.
