A Belize International Trust was specifically created to entice foreigners into forming trusts in Belize. Foreigners can form Belize trusts and control them from anywhere in the world.
The law governing international trusts began with the Trusts Act of 1992 which was amended by the Belize Trusts Act in 2007. This law was based on the Guernsey Trusts Law of 1989 with several modifications to create a strong asset protection trust platform.
The most important feature of the 2007 amendment was the abolishment of allowing other countries’ fraudulent conveyance laws as a way to challenge the legality of transferring assets to the trust. Those laws could claim that assets were transferred to the trust in order to defraud creditors from seizing them to pay debts and court judgments against the settlor. This amendment makes the Belize International Trust the strongest asset protection vehicle in the world.
Blending a trust with a Belize International Business Company (IBC) produces one of the strongest asset protection structures in the world. The idea is to have a Belize trust hold the shares of a Belize IBC providing an extra layer of privacy and asset protection for the owner.
Background
Belize is the only English speaking country in Central America. Formerly called “British Honduras” it gained its independence from the British Empire in 1981 after becoming a British Crown Colony in 1862, but still considers the Queen of England as its monarch.
Benefits
A Belize International Trust enjoys the following benefits:
• Foreign Ownership: Foreigners can create trusts and maintain control.
• No Taxes: As long as no Belize residents or assets are involved with the trust parties and assets, no taxes of any kind are imposed. Note: United States taxpayers and anyone taxed on worldwide income must report all income to their tax agencies.
• Asset Protection: Belize offers one of the best jurisdictions for complete global asset protection. Their law refusing to abide by foreign fraudulent conveyance laws is the best in the world.
• Estate Planning: Ideal international estate planning platform to avoid probate, forced heirs, and estate or inheritance taxes.
• Settlor’s Control: Not only does the Settlor set controls with the Trust Deed, he or she can appoint a Protector to oversee the Trustee.
• Confidentiality: Belize laws require complete confidentiality from the Trustee, Trust Agent, and the Registrar.
• Privacy: Neither the names of the Settlor or the Beneficiaries are in any public records.
• English: As a former British Crown Colony for 119 years, English is the official language.
Belize International Trust Name
A Belize International Trust must not have the same or similar name to that of any other legal entity.
The name must end with the word “Trust”.
Aspects of a Trust
The owner (“Settlor”) of funds and properties (“Assets”) can transfer the assets to a third party (“Trustee”) who is independent from all associates and relationships of the owner. The Trustee is legally required to manage and hold the assets for the benefit of another individual or a group of individuals (“Beneficiaries”).
The main principle of the Trust is the separation of the assets’ legal title (ownership) from the Settlor and the Beneficiaries. The Trustee maintains sole control over the assets including the rights to dispose of them. The Trust is controlled by a legal instrument (“Trust Deed”) written by the Settlor which the Trustee must follow.
Settlor
The Settlor is the natural person (or legal entity) creating the Trust by placing specific assets owned by the Settlor into a Trust under the control of a Trustee with clear instructions that the assets are held for the benefit of the Beneficiaries.
Trustee
The Trustee is the natural person (or legal entity) holding legal title to the Settlor’s assets. While maintaining total control over the trust assets, the Trustee is required to follow the Settlor’s written instructions and to hold the assets solely for the benefit of the Beneficiaries. The Trustee is legally prevented from personally benefitting from the use of the assets.
Belize laws requires all Belize resident trustees to be licensed by its International Financial Services Commission. The Commission established rigorous criteria to license trustees.
While a Trust is not required to appoint a Belize resident Trustee, in order to qualify as a Belize International Trust, the governing law for the trust must be Belize laws. In addition, a licensed Belize Trust Agent must be appointed.
Trust Agent
If a Belize Trust Agent is appointed, the agent must maintain the following information which is confidential:
• Trust’s name;
• Settlement date of the trust;
• Registration date of the trust;
• Trustee’s name;
• Settlor’s name;
• Protector’s (if any) name;
• Beneficiaries’ names and addresses;
• Initial funds and assets;
• Additional assets;
• Changes in beneficiaries;
• Changes in Protector; and
• Trust Deed and any later amendments.
The Trust Agent does all of the filings with the Registrar.
Beneficiaries
The Beneficiaries (or sole Beneficiary) are a third party who benefits and profits from the held trust assets managed by the Trustee. The Trust Deed either specifically names all of the Beneficiaries or sufficiently defines a group of persons (i.e. “all my legal heirs”). The Settlor has the option to name him/herself as the sole Beneficiary.
Protector
The Protector is an option chosen by the Settlor. The Protector is appointed to supervise the Trustee. This provides the Settlor with additional security that the trust assets will be properly held and managed. The Protector will be able to remove and replace the Trustee. The Protector could be the Settlor or one of the Beneficiaries. Typically, the Protector is a trusted relative, advisor, or a friend of the Settlor.
Trust Deed
The Trust Deed is a written document setting out the duties of the trustee, beneficiaries’ names, and description of the trust assets. It should include details of how the trust assets must be held, managed, invested, and distribution of any benefits. Trust Deeds are custom made and unique although some standards wording may be used.
Asset Protection
Because the assets of a trust have been removed from the ownership of the Settlor and are not owned by the Beneficiaries, future creditors to both parties will not be able to obtain a court order allowing the seizure of those assets pay debts and court judgments. This is why it is very important to create a Trust before any legal claims to the assets arises. Existing creditors of the Settlor could have the right to challenge the creation of a Trust and the transference of assets to it by claiming it is an illegal “Fraudulent Conveyance” and a “sham” to hide assets from existing creditors. This type of legal claim has defeated trusts in many countries.
Fraudulent Conveyance
Belize may be the only country providing immediate protection against other countries’ Fraudulent Conveyance laws.
Some countries require a minimum time period for someone to file a challenge to the trust claiming there was a fraudulent conveyance regarding one or all assets. The challenge may be upheld by that countries courts.
In 2007, when Belize amended its trust law, it repealed all provisions regarding fraudulent conveyance claims against its trusts. This protection is immediate and will stand up to claims made by heirs, spouses, and creditors. The only exceptions where the protection can be set aside are claims of duress, undue influence, incapacity of the settlor, or criminal fraud.
In addition, the Trusts Act requires Belize courts when considering claims against trusts from other countries cannot allow seizure of trust assets from foreign court orders arising from marital divorces, spousal or relatives succession rights to an estate, or claims by creditors in an insolvency.
Also, reciprocal judgments enforcement with other countries will not apply to Belize trusts. This means a new lawsuit needs to be filed in Belize against the trust.
Privacy
Trust assets no longer owned by the Settlor do not have to be declared or reported to governments, new spouses, newly formed business ventures, or future creditors. Likewise, the Beneficiaries do not have to reveal that assets are held for their future benefit in a trust. Complete privacy of the assets can be achieved by transferring their ownership to a trust.
Estate Planning
When a person dies, his or her estate and all of its assets usually go through a court probate procedure. This can be costly as appraisers are hired to value the assets, lawyers are hired to handle the court proceedings, and other lawyers may be hired to challenge the disposition of the assets by outsiders claiming to be left out heirs to the estate or pre-death creditors seeking payment from the assets. These claims can take a lot of time to resolve.
Creating a trust avoids probate because there are no assets in the deceased’s estate. Thus, trusts save time and money for the Settlor’s heirs by avoiding probate. When the Settlor passes away, the trust remains and continues to follow the Settlor’s wishes by holding the assets and disposing them to the Beneficiaries as the Trust Deed directs.
The term “estate sale” refers to the forced sale of an estate’s assets to pay for all the costs associated with probate and the inheritance tax many government impose. Sometimes, a family business must be hurriedly sold at a discount to pay for all of these expenses. Trusts avoid all of these unnecessary “fire sales” and death taxes. If the family business is owned by a trust it will not have to be quickly sold to pay the estate taxes and probate costs.
Avoiding Forced Heirship
Sometimes, Settlor’s may not want to have their estate passed onto his or her heirs and wish to make different arrangements. However, some countries have laws forcing heirship on the estate and its assets even though the deceased wanted something different. Once all of the assets are owned by the trust, the Settlor’s estate has nothing (or few personal possessions) left for the heirs. Thus, forced heirship will not affect the trust’s assets.
Tax Planning
Since trust assets are no longer owned by the Settlor, all of the capital gains and taxable profits earned by the trust are not attributed to the Settlor. Belize does not impose business, corporate or income taxes or capital gains taxes, or inheritance tax, or an estate tax, or gift taxes, or any stamp duty upon the global assets held by a Belize International Trust. Therefore, a Belize Trust offers a tax-free structure for wealth accumulation and preservation.
However, the Beneficiaries must be made aware that any income or benefits they receive from the trust may be subject to taxation by their countries who tax global income. They may be required to disclose all global income to their tax authorities.
Qualifications or a Belize International Trust
The Belize Trusts Act defines an “International Trust” (sometimes referred to as an “Offshore Trust”) as:
1. The Settlor is not a Belize citizen of or a resident;
2. None of the Beneficiaries are Belize citizens or residents;
3. No land or real property is included in the Trust’s assets;
4. The Trust Deed selects the law of Belize at the proper jurisdiction; and
5. Purpose Trusts must have the object or purpose to be performed outside of Belize.
Registration
An International Trust (as opposed to a “domestic trust”) requires a written Trust Deed and official registration with the Belize government to become valid.
The Belize Registrar of International Trusts requires the following information:
• Trust name;
• Settlement date for the trust;
• Date of registration;
• Trustee’s name;
• Protector’s (if any) name; and
• Trust agent’s name and address.
The Trust Agent files the necessary documents and specific application form and affidavit with the Registrar who approves and issues a numbered Certificate of Registration.
The Trust Deed does not have to be filed with the Registrar. Thus, the names of the Settlor and the Beneficiaries are never part of the public records. In addition, neither the purpose nor the assets are disclosed in any public records.
The application only contains basic information regarding the Trust. It does not contain any information identifying the Settlor and Beneficiaries or about the assets.
In addition to the application, the Trust Agent files an affidavit verifying that all the confidential information required by the Act to be kept by the Trust Agent is being held in his/her office.
Confidentiality
The Belize Trusts Act contains numerous confidentiality provisions. Trustees are prohibited from disclosing any information about the trusts they manage. Trustees are required to provide all information regarding a trust to the Settlor and the Protector.
The Registrar is prohibited from disclosing any information regarding a registered trust without written authorization from the trustee or trust agent. Exceptions exist for criminal investigations conducted by the Belize police and prosecutor’s office or other enforcement or regulatory authority in Belize.
Form a Belize International Trust Conclusion
A Belize International Trust enjoys the following benefits: complete foreigner creation and control, no taxes, superior asset protection, estate planning, privacy, confidentiality, and its official language is English.
