British Virgin Islands Trusts

Trust in the British Virgin Islands: BVI Trusts

A Trust is a way of controlling assets without legally owning them. The original owner of the assets (the Settler) places the real or personal property, cash, investments or any other assets into a trust to be administered by a trust company, bank, or individual (the Trustee). The trustee then administers the assets for the benefit of others (the beneficiaries). Any act or neglect on the part of the Trustee not authorised or excused by the terms of the trust or by law is called a Breach of Trust. The Beneficiaries have an equitable interest or estate in the trust assets, whereas the Trustees have a legal interest or estate in the assets.

Trust Management has been a major activity in the British Virgin Islands for 30 years or more. Originally the Trust was used primarily by wealthy individuals from the major common law countries, but it is now accepted as a major technique of asset protection in all parts of the world. Trusts in the BVI have a basis in common law, The trust law of the British Virgin Islands is based on English trust law. BVI Trusts are formed under the Trust Ordinance 1961 (based on the English Trustee Act 1925), as updated and amended by the Trustee Amendment Act 1993.

Since the 1993 Act, there is no requirement for registration of trusts in the BVI, and there is no public disclosure of information regarding trusts and trustees are exempt from any need to file annual returns and from any other reporting requirements. Trust duty of $50 is payable on each trust instrument, which is achieved by buying and affixing stamps, creating no record. The Amendment Act introduced a fixed perpetuity period not exceeding 100 years.

The majority of BVI trusts are exempt from all taxes provided there are no beneficiaries resident in the BVI, and that the trust does not conduct any business in the BVI or own any land in the jurisdiction. The Amendment Act provided for the appointment of a 'protector of trust', effectively a supervisor of the trustee(s), and also managing and custodian trustees. A company offering trust services must obtain a licence under the Banks and Trust Companies Act 1990 and conform to various conditions.

In 2003 the BVI enacted legislation implementing proposals made by the Society of Trust and Estate Practitioners (STEP) to reform trust law in the BVI. Three separate statutes will modernise BVI trust law. Further, the BVI Special Trust Act creates the "VISTA" trust. The Act allows a person to set up a trust to hold shares of an underlying BVI international business company without the usual constraints of English trust law.

Due to the Amendment Act, the regime for trusts in the BVI is very flexible. The following are some of the main features of BVI trust law:

• the proper law of a trust can be specified by the trust instrument; in the absence of a specified jurisdiction, a trust will be under BVI legislation if the trustee or the trust administration is situated in the BVI
• trusts can migrate into and out of the BVI; but outwards migration is only possible if the 'receiving' jurisdiction recognizes the validity of the trust
• purpose trusts are permitted in perpetuity and must have at least one BVI trustee (resident professional or equivalent
• the perpetuity period can be set at 100 years, but lives in being is still possible
• protectors are explicitly permitted, and their powers are clearly defined
• forced heirship provisions are excluded
• trustees may be given wide discretionary investment powers
• BVI trusts are exempt from all taxation provided that there is no resident beneficiary and no BVI assets

The traditional use of trusts is protection and preservation of family assets. The most common purposes for establishing a Trust are:

• Asset Protection
• Will Substitute and Avoidance of Probate
• Avoidance of Forced Heirship
• Family Succession Planning
• Tax Planning & Avoidance of Estate Duty
• Benefit of Charities & Purpose Objectives
• Confidentiality and Privacy Protection
• Contingency Planning
• Trust is a relationship among the three parties: Settlor, Trustee and Beneficiary (ies).

Settlor is the person or corporation who establishes the Trust.

Trustee is the person or corporation appointed by the Settlor holding legal ownership of assets in the Trust for the benefit of the Beneficiaries.

Beneficiaries are the persons, corporations or charities having the beneficial right to enjoy the assets in the Trust.

BVI trusts are exempt from registration under the Registration and Records Act, and trustees are exempt from any need to file annual returns and from any other reporting requirements.

The majority of BVI trusts are exempt from all taxes provided there are no beneficiaries resident in the BVI, and that the trust does not conduct any business in the BVI or own any land in the jurisdiction.

The Trustee Act establishes the characteristics of the Trust:

• the assets constitute a separate fund and are not part of the trustee's own estate;
• title to the trust assets stands in the name of the trustee or in the name of another person on behalf of the trustee; and
• the trustee has the power and the duty in respect of which he is accountable to manage, employ or dispose of the assets in accordance with the terms of the trust and the special duties imposed on him by law.

Trust income is exempt from tax if:

• the trust is created by or on behalf of a non-resident person; and
• owns no land in the BVI; and
• does not carry on business in the BVI.

When setting up a BVI Trust, it is not necessary to register the Trust with the Financial Services Commission or another governmental agency. When a trust is established or a "chargeable instrument" is created, it is simply necessary to affix the necessary stamp (stamp duty) to the document without presenting the instrument to the Treasury, Post Office or other public body. There are formalities which should be followed with respect to the Declaration of Trust or Deed of Trust, but these are minimal compared to certain other jurisdictions. There are no annual government fees payable for BVI trusts which have been duly established.

BVI Offshore Companies Formation Packages

BVI companies are one of the best offshore structures on the market at present and BVI offshore company formation process is very straight forward. Coddan offers Offshore Company Formation in BVI, cut out to your needs:

Economy Package - £560.00

The Economy Business Company package includes:

• The registration of your British Virgin Islands' Business Company within 2 to 5 working days. After the incorporation please allow us 4-5 business days to receive original documents from the BVI Registrar of Companies.
• Company name availability, confirmation, and reservation
• The payment of initiation fees
• The payment of the first year's registration fees
• The appointment of your own candidates to the roles of director and shareholder
• The registration of your US$50,000 authorized share capital divided into 50,000 shares valued at US$1.00 each (a minimum of one share must be issued)
• The preparation and submission of the Memorandum and Articles of Association of your company
• A local registered office address and a local registered agent (both of which are statutory requirements in the British Virgin Islands)
• The first year's fees for a local registered office address and a local registered agent

The following documents will be sent to you via courier:

• The original Certificate of Incorporation
• A bound copy of the Memorandum and Articles of Association of your company
• The Minutes of the First Meeting of the Board of Directors
• A completed Register of Directors and Shareholders
• Share Certificates
• A company seal

Order BVI International Business Company: Economy Formation Package - £560.00

Please contact us for more information. If you have any queries, please call us during business hours and speak to one of our highly trained incorporation specialists. You can call us by phone 800-081-1510 or + 44 (0) 207.935.5171, or make an initial consultation request.