A Montserrat Exempt Trust is a perfect platform so foreigners can transfer title to assets and enjoy tax free income while providing asset protection and estate planning for family members for up to 100 years. Foreigners may create exempt trusts with totally foreign beneficiaries and global assets.
The Montserrat Trust Act of 1998 governs all forms of trusts regarding their formation, permissible activities, and dissolution. It also governs the trustee industry and the conduct of trustees.
Background
Montserrat is a British Territory located in the Caribbean.
Since 1632, it has been under control of the British Crown with English as its only official language.
Benefits
A Montserrat Exempt Trust gives foreigners these benefits:
• Full Foreign Participation: Foreigners may create trusts with all foreign beneficiaries and worldwide assets.
• Total Tax Exemptions: Exempt trusts are exempt from all taxes. Note: U.S. taxpayers obligated to report all world income to their IRS. All others subject to taxes on world income must also report all income to their governments.
• Privacy: No information regarding trusts are in public records. The law requires trustees to keep all information confidential.
• Estate Planning: With a lifespan of up to 100 years, trusts provide families with many generations of estate planning benefits. Foreign forced heirship laws not recognized.
• Asset Protection: Since the trustee owns all assets, future creditors of the settlor and/or beneficiaries have no claims against the assets. Also, foreign laws favoring creditors not recognized.
• Settlor’s Control: Not only can the settlor execute favorable trust instrument terms, but can also be a beneficiary, trustee, or protector.
• Protector: The settlor maintains control over the trustee by appointing a protector who can be the settlor or a beneficiary.
• English: As a current, British Territory, English is the only official language.
Montserrat Exempt Trust Name
Trusts must avoid adopting a name too similar to any other legal entity’s name in Montserrat.
The word “Trust” must be added to the end of the name to avoid confusion with other types of legal entities in Montserrat.
Definition of a Trust
The Act defines a trust as a legal relationship between a settlor who owns assets being placed under the control of a trustee to benefit other persons or for a specific purpose.
A trust has the following features:
• The assets of the trust are considered separate assets and not part of the trustee’s assets or estate;
• Title to the trust’s assets are transferred to the trustee’s name;
• The trustee has the duty and power to manage, administer, and dispose of the assets according to the terms written in the trust instrument and by law;
• The trustee has a fiduciary responsibility to manage and administer the trust’s assets.
Duration
Trusts can exist up to 100 years from the date of formation.
Types of Trusts
All trusts must be created with a written trust instrument. The instrument may be written in English or another language provided that a certified translation is attached to the original instrument.
The types of trusts under Montserrat law are: charitable trusts, corporate trusts, purpose trusts, and exempt trusts.
Purpose Trust
A purpose trust means a trust other than one which benefits particular persons or aggregate of persons who have a personal relationship with the settlor. The purpose must be specific and able to be fulfilled. Its purpose must be lawful and not immoral. The purpose may require a certain event to occur before the trust terminates upon its occurrence.
Exempt Trust
An exempt trust pays no taxes of any kind in Montserrat.
An exempt trust requires that:
• The settlor is a non-resident of Montserrat at the time of the trust’s creation and every time the settlor transfers new assets to the trust;
• None of the beneficiaries are residents of Montserrat;
• A least one of the trustees is either a licensed trust corporation or a licensed bank under the Offshore Banking Act; and
• None of the trust assets are immovable property in Montserrat.
Settlor
Anyone with the capacity to own and transfer properties may become a settlor of a trust. Settlors must be of legal age with sound mind under the laws of the country he or she resides. Settlors may reside in and be nationals of any country.
A settlor may become a beneficiary, trustee, or the protector of the trust.
Trustees
The trustee may be any person having the right to own and transfer properties under the laws of Montserrat.
When dealing with third parties if a trustee fails to notify the other party that he or she is acting in the capacity as a trustee he or she will be personally liable if the transaction or matter causes harm to the third party.
Trustee must perform their duties by:
• Acting with due diligence;
• Observing utmost good faith;
• Using the best abilities and skills; and
• Exercising a standard of care expected of a prudent and reasonable business person.
In addition, trustees must carry duties and administer the trust in accordance to the trust instrument and the Act. A fiduciary duty is owed to the beneficiaries and/or the trust’s purposes.
The trustee must keep all information regarding trust administration and the trust property in complete confidence.
The trustee must maintain a copy of the trust instrument and copies of any amendments at the registered office. In addition, the trustee must keep a register of the trust containing the following information:
1. Settlor’s name;
2. Summary of the trust’s purpose;
3. The protector’s name;
4. Annual accounting records demonstrating the true financial position of the trust including the assets and income during the fiscal year.
This register is private and not accessible to the public. However, it must be accessible to the settlor, beneficiaries, protector and the Attorney General with the right to inspect at any time.
Protector
A protector may be appointed. The protector may be the settlor or a beneficiary, but not a trustee of the trust. Unless the trust instrument states otherwise, the Act provides protectors with the power to remove and appoint trustees.
Protectors owe a fiduciary duty to the beneficiaries of the trust or to the purpose for which the trust was created.
Foreign Laws
No foreign law may declare a Montserrat trust or the transferring of international assets to it to be defective, liable to be set aside, void or voidable by reason of:
(a) The foreign law does not recognize the concept of a trust; or
(b) That the trust or asset transfer avoided or defeated any claim, right, or interest granted by any foreign law because of a personal relationship with the settlor or by right of heirship.
Taxes
A trust is exempt from all taxes and duties. This includes the corporate profit tax, gift tax, wealth tax, inheritance tax, capital gains tax, and stamp duty.
Income from a trust received by the non-resident beneficiaries is exempt from income taxes.
Note: U.S. residents must disclose all domestic and foreign income to the Internal Revenue Service. Anyone else subject to taxation of all world income must report all of their income to their tax authorities.
Public Records
None of the information concerning trusts, their settlor, beneficiaries, trustee, protector, and location of the assets are included in any public records.
Time for Creation
The trust instrument may be prepared in one working day.
Conclusion
A Montserrat Exempt Trust provides the following benefits: total foreign participation, no taxes, privacy, settlor’s control, protector, asset protection, estate planning, and English is the only official language.
