The Belize Trust Act Of 1992
Belize established a modern Belize Trust Act in 1992 generally regarded as incorporating the best features of similar laws prevailing in other major offshore jurisdictions such as Cayman, Panama and Bermuda. With the benefit of hindsight, the Belize Trust Act represents the ultimate refinement of this type of legislation and is thus regarded as the most advanced instrument of its kind in the world.
Belize established a modern Belize Trust Act in 1992 generally regarded as incorporating the best features of similar laws prevailing in other major offshore jurisdictions such as Cayman, Panama and Bermuda. With the benefit of hindsight, the Belize Trust Act represents the ultimate refinement of this type of legislation and is thus regarded as the most advanced instrument of its kind in the world.
Trusts can be established either by oral declaration or by written instruments without any cumbersome requirements or legal expressions. However, unit trusts must be formal written documents and trusts that pertain to property in Belize are unenforceable unless they are written instruments.
A critical advantage of Belize Trusts is that the original is prepared in English and drafted in conformance with English common law which is the foundation of all laws in Belize. Other jurisdictions need to prepare the trust in their official language, and then undergo potential pitfalls in translation.
Furthermore, unlike some Caribbean islands that are still colonies, Belize as an independent nation is not subject to pressure from a mother country in guaranteeing the confidentiality and integrity of its offshore instruments.
Protection of Assets
Trusts formed under Belize law are highly secure since a Belizean court cannot set aside or vary a Belizean trust. No Belize Trust has ever been compromised. A Belize court cannot entertain any claim against the trust property emanating from the order of a foreign court regarding marriage or divorce, or succession or claims by creditors in an insolvency. This is one of the strongest pillars upholding the Belize Trust and serves to completely shield the assets of the trust despite any laws relating to fraudulent transfers, bankruptcies or
reciprocal enforcement of judgements laws which sue-happy attorneys would otherwise use in an attempt attach assets.
Settlors and Beneficiaries
The settlor of a trust can be any individual capable of owning and transferring property. The settlor may also be the trustee or protector of the trust. The law provides for the creation of spendthrift trusts and abolishes the rule that a settlor may not be the beneficiary of a spendthrift trust. This is an important element that is lacking in much weaker trusts existing in other jurisdictions, for example the USA, where spendthrift trusts are not possible. Settlors and beneficiaries may give to trustees memoranda of wishes to guide the trustees.
Maximum Life of a Trust
Non-charitable Belize Trusts have a maximum life of 120 years. Charitable trusts may be established with unlimited duration. The rule against perpetuities does not apply to trusts under our jurisdiction.
Trustees and Protectors
Our trust law allows for a protector who may also be a settlor, trustee or beneficiary. In carrying out his duties, a protector has a fiduciary obligation to the beneficiaries of the trust. However, he or she is not considered a trustee. A trust can have a minimum number of one or a maximum number of four trustees (except for charitable trusts). A trustee may also be a beneficiary and a settlor. Liberal powers are given to trustees to advance moneys for
maintenance and education of children and beneficiaries. Trustees are similarly empowered to advance moneys to beneficiaries before their interest in the trust is realised.
Breach of Trust
Individuals serving as Trustees are personally liable at law for any losses, decrease in value of trust assets or loss of profits as a consequence of a breach of trust. However, in the case of a corporate trustee the directors are not personally liable.
Tax-Free Trusts
Trusts are completely free from any form of taxation provided that neither the settlor nor any of the beneficiaries are residents of Belize during that year; and the trust assets do not include any property located in the territory of Belize. There is no income tax, inheritance tax or stamp duty liability in relation to income, death or transactions relating to a Belize Trust trust.
Foreign Exchange regulations do not apply.
Trust Registration
Trusts may be registered with the Belize Registrar at the option of the settlor for a fee is US$100. The Registrar is required to issue a certificate of registration. An entry in the register of trusts cannot be opened for inspection without the written consent of the trustee.
A critical advantage of Belize Trusts is that the original is prepared in English and drafted in conformance with English common law which is the foundation of all laws in Belize. Other jurisdictions need to prepare the trust in their official language, and then undergo potential pitfalls in translation.
Furthermore, unlike some Caribbean islands that are still colonies, Belize as an independent nation is not subject to pressure from a mother country in guaranteeing the confidentiality and integrity of its offshore instruments.
Protection of Assets
Trusts formed under Belize law are highly secure since a Belizean court cannot set aside or vary a Belizean trust. No Belize Trust has ever been compromised. A Belize court cannot entertain any claim against the trust property emanating from the order of a foreign court regarding marriage or divorce, or succession or claims by creditors in an insolvency. This is one of the strongest pillars upholding the Belize Trust and serves to completely shield the assets of the trust despite any laws relating to fraudulent transfers, bankruptcies or
reciprocal enforcement of judgements laws which sue-happy attorneys would otherwise use in an attempt attach assets.
Settlors and Beneficiaries
The settlor of a trust can be any individual capable of owning and transferring property. The settlor may also be the trustee or protector of the trust. The law provides for the creation of spendthrift trusts and abolishes the rule that a settlor may not be the beneficiary of a spendthrift trust. This is an important element that is lacking in much weaker trusts existing in other jurisdictions, for example the USA, where spendthrift trusts are not possible. Settlors and beneficiaries may give to trustees memoranda of wishes to guide the trustees.
Maximum Life of a Trust
Non-charitable Belize Trusts have a maximum life of 120 years. Charitable trusts may be established with unlimited duration. The rule against perpetuities does not apply to trusts under our jurisdiction.
Trustees and Protectors
Our trust law allows for a protector who may also be a settlor, trustee or beneficiary. In carrying out his duties, a protector has a fiduciary obligation to the beneficiaries of the trust. However, he or she is not considered a trustee. A trust can have a minimum number of one or a maximum number of four trustees (except for charitable trusts). A trustee may also be a beneficiary and a settlor. Liberal powers are given to trustees to advance moneys for
maintenance and education of children and beneficiaries. Trustees are similarly empowered to advance moneys to beneficiaries before their interest in the trust is realised.
Breach of Trust
Individuals serving as Trustees are personally liable at law for any losses, decrease in value of trust assets or loss of profits as a consequence of a breach of trust. However, in the case of a corporate trustee the directors are not personally liable.
Tax-Free Trusts
Trusts are completely free from any form of taxation provided that neither the settlor nor any of the beneficiaries are residents of Belize during that year; and the trust assets do not include any property located in the territory of Belize. There is no income tax, inheritance tax or stamp duty liability in relation to income, death or transactions relating to a Belize Trust trust.
Foreign Exchange regulations do not apply.
Trust Registration
Trusts may be registered with the Belize Registrar at the option of the settlor for a fee is US$100. The Registrar is required to issue a certificate of registration. An entry in the register of trusts cannot be opened for inspection without the written consent of the trustee.
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