Brunei International Trust (IT)
A Brunei International Trust (IT) can be set up as an asset protection trust or a special trust.
In 2000, legislation creating an offshore finance center was enacted. The international trusts was one of them. New laws were enacted covering offshore companies, international banking, registered agents and limited partnerships.
The law governing the formation, activities, and termination of trusts in Brunei is called the International Trust Order of 2000 (hereinafter “ITO”). This law was specifically designed for foreigners as an international trust.
Brunei is a small, oil rich sultanate located in Borneo’s northern coast. The official name is “State of Brunei, Abode of Peace”. After being a British protectorate since 1888, independence was gained in 1984. Petroleum and natural gas comprises the majority of its revenues. It enjoys the highest rate of capita income in Asia.
Politically, Brunei is a constitutional monarchy prevalently Islamic with a Sultan as its monarch with total power. No elections occur. The Sultan appoints the cabinet and prime minister and the ministers.
A Brunei International Trust (IT) offers the following benefits:
• Designed for Foreigners: International trust were created for foreigners.
• No Taxation: International trusts pay no taxes including the beneficiaries. However, U.S. taxpayers must report all income as do everyone subject to global income taxation to their governments.
• Fast Formation: A trust can be formed in one day.
• Asset Protection: Asset protection trusts can be formed to protect a family’s wealth.
• Estate Planning: International trusts are ideal vehicles for a family’s estate planning needs.
• Privacy: The names of the settlor, beneficiaries, enforcer, and protector are never included in any public records.
• English: After 96 years as a British Protectorate, one of its official languages is English.
International Trust (IT) Name
Trust must select a name not already used by any legal entity in Brunei.
The word “Trust” must appear at the end of its name to avoid confusion with other legal entities.
Types of Trusts
Purpose Trusts – a purpose trust can be formed either for charitable or non-charitable purposes. Such purposes may include acting similar to a holding company by holding corporate stocks in international companies. Or, holding different securities such as bonds, commodities, mutual funds, investment vehicles, etc. Purposes must be practicable, reasonable, and not illegal or immoral.
Asset Protection Trust – this type of trust establishes a family wealth preservation structure to protect the assets from future creditors of the settlor and beneficiaries. This is also a perfect platform for family estate planning guaranteeing that the settlor’s heirs and their heirs enjoy the benefits of the assets for many generations.
Special Purpose Vehicles (SPV) – which provide the planning and financing for special projects whether charitable or commercial in nature.
Charitable Trusts – besides traditional charitable trusts, “inquired charities” such as protecting historical buildings and the environment may be established.
Spendthrift Trusts – prevents beneficiaries who may not be trusted or lack mental capacities to spend income and assets in a reasonable manner. The trust deed provides guideline or requirements for the trustee to follow when disbursing income or assets to specific beneficiaries.
The ITO requires all international trusts to be in writing, created by a non-resident, to be specifically declared as an international trust with a minimum of one local trustee licensed by the Registered Agents and Trustees Licensing Order of 2000 (RATLO), and only non-resident beneficiaries.
If the settlor (creator) wishes to reserve certain powers for him or herself, the trust will not become invalid. The trust deed must specifically identify which powers are to be retained with the settlor.
International trusts have wide discretion regarding the types of investments to become involved with. Trustees may seek advice from financial and investment experts for guidance.
This legal document provides all of the rules and requirements in order to manage the trust and administer the trust’s assets and make distributions of income and assets to the beneficiaries. The settlor creates and executes the trust deed.
The trust deed should include the purpose of the trust along with the powers and duties of the trustees, enforcer, and the protector along with their compensation. In addition, the trust deed should provide specifics regarding the appointment and removal of the key personnel.
A trust deed should function as a corporation’s articles of incorporation and by-laws combined.
The creator (settlor) forms the trust. Settlors may be natural persons or legal entities from any country without having to reside in Brunei. For international trusts, the settlor must be non-residents.
At least one of the appointed trustees must be a Brunei resident licensed by the Registered Agents and Trustees Licensing Order of 2000 (RATLO).
Trustees possess wide powers to make investments, manage the day to day operation, and administer the trust according to its purpose and requirements set forth in the trust deed. Whenever the trust deed fails to provide detailed instructions and guidelines or requirements, the trustee can apply to a Brunei court for advice or an opinion or direction related to handling the trust’s assets.
Trustees may delegate powers to third parties and appoint agents. Trustees are entitled to compensation which should be described in the trust deed.
Trustees owe a fiduciary duty towards the beneficiaries and must act in god faith and utilize reasonable skills and decision making when making investments and selling assets.
Only non-resident beneficiaries are permitted for an international trust. Beneficiaries must be natural persons residing in or citizens of any other country.
The trust deed and the type of trust determines what rights beneficiaries have in regards to the assets and the income they generate.
The settlor can appoint a protector to protect the beneficiaries. The trust deed determines what powers, duties, functions, and compensation the protector receives.
Protectors can be legal entities or natural persons residing in any country.
The settlor may also appoint an enforcer to enforce the purpose of the trust. The trust deed provides what powers and duties the enforcer has and what compensation is paid. Powers may include requiring the trustee to seek consent prior to making decisions or acting on important matters. Veto power over the trustees’ actions and decisions may also be provided in the trust deed.
Enforcers may be natural persons or legal entities residing in any country.
Trusts must maintain a local office address which is normally that of one of the trustee’s office.
International trusts do not pay any taxes. No income tax, corporate tax, capital gains tax, gift tax, estate tax, wealth tax, or inheritance tax.
Note, U.S. taxpayers and anyone from countries taxing worldwide income must report all income to their tax authorities.
The names of the settlor, beneficiaries, enforcer, and protector are not included in any public records.
An international trust can be formed in one day depending upon the speed of the documents preparer.
A Brunei International Trust (IT) offers these benefits: made for foreigners, privacy, no taxation, estate planning, asset protection, fast formation, and English as one of its official languages.