Since 1990, with the passage of the International Business Companies Act, Belize has become renowned as a top offshore jurisdiction. Of all such jurisdictions, Belize trust law is arguably the best governing asset protection from lawsuits. This is especially true when it involves foreign judgments or third-party. Top British and U.S. trust experts helped develop the trust laws of Belize. To date, no Belize asset protection trust has ever been compromised.
Strong & Flexible Trusts
Two of the great advantages of a Belize asset protection trust are its strength and flexibility. We will discuss the strength of the Belize trust in great detail below. The biggest strength is that once you place assets inside of the trust, the trust immediately protects those assets.
Regarding flexibility. these trusts may include various asset protection clauses. Do you want estate planning so your children or others to inherit the trust when you pass? You can do so. Do you want to change your domestic trust into an offshore one? You can do this also. There is no one-size-fits-all when it comes to investor needs, so Belize trusts appeal to a wide range of people. Belize trusts may also include automatic successor trustee and protector provisions.
Adding to the flexibility is the fact that Belize does not mandate a minimum amount necessary for trust creation. In addition, one can set up a trust in Belize in any currency. The Belize International Financial Services Commission (IFSC) regulates all trusts.
About Belize
Located on Central America’s eastern shore, Belize is an independent, sovereign nation with a diverse population. Formerly the colony of British Honduras, Belize’s official language is English, but Spanish is also widely spoken. It received independence from Great Britain in 1981. Thereafter, Belize realized the international financial services sector was one that could help diversify its economy and gain competitive advantage.
The government is a parliamentary constitutional monarchy, and Queen Elizabeth II is the official head of state. Meanwhile, the prime minister is the head of government.
A popular tourist destination, Belize sports an international airport and has first-rate telecommunications links. In addition, it has a excellent transportation system. Belize boasts a history of political and governmental stability. As such, investors can feel confident conducting business here.
Establishing a Belize Asset Protection Trust
Establishing a Belize asset protection trust is a straightforward procedure. Neither the settlor –the person or entity putting assets into the trust –nor any beneficiaries may reside in Belize. Belizean real estate assets cannot go into the trust.
The trust must name a trustee who is responsible for trust management. The only requirement per se is that a trustee is an adult of sound mind.
Under Belize law, all offshore trusts governed must have a trust agent resident in Belize. The trust agent’s office serves as the trust’s office. In 2007, the Trusts Amendment Act became law. International trusts now require registration with the International Trusts Registry in the Office of the IFSC. Belize asset protection trusts have no minimum share capital requirement.
Settlors need provide only limited information when establishing a trust and filling out the application form. The necessary information includes:
- Trust name
- Trust type
- Settlement date
- Beneficiaries list (not displayed in the public records)
- Trustee name
- Trust agent name
The settlor must also disclose how they initially funded the trust. This can include cash, securities or real property. The Belize trust either names beneficiaries specifically, or generally, such as “all children and grandchildren.”
The Protector (Optional)
The settlor has the option of naming a protector. A protector is an individual the trust names to act as an intermediary between the settlor and beneficiaries. Moreover, the protector can protect the trust from a “rogue” trustee and unsatisfactory management. A trust protector, by necessity, is an independent third party and not related to the settlor, trustee or beneficiaries. Other than a relative, settlors may name anyone they please to serve in this capacity.
In addition, it is wise to not have the protector reside in your home country. The reason for this is that the judge can issue court orders to a protector who resides within his jurisdiction. In the United States, for example, this means the judge can give orders to anyone in the country. When naming a protector, the trust should also address how it compensates the protector.
Belize Trust Setup
The trust agent keeps all other information regarding the trust. There is no need to disclose additional information to the Trusts Registry or make any other information public. Most importantly, the registry does not mandate the filing of the trust deed. So the information in the trust remains private to casual prying eyes. The trust agent must have the contact information, names and addresses and copies of passports for the trust’s principles; that is, the settlor, trustee, beneficiaries and optional protector.
Belize asset protection trusts are usually considered irrevocable. This means that one cannot readily change the terms of the trust, unless the trust expressly provides for revocation power.
The laws consider such trusts as Belize non-residents. Thus, it makes the Belize trust exempt from exchange control regarding trust property. That means it limits restrictions for transactions the trust carries out with other countries.
The settlor and the trustee must sign the trust deed. The trustee must sign the declaration of trust. If someone makes the signature outside Belize, notarization or the equivalent in the particular jurisdiction is necessary.
What Belize Trusts Can Do
Once the Belize trust is created, it can conduct business. Thus, it can hold a bank account, trade in securities, secure real estate investments and hold about any other type of property. For example, it can own gold, jewelry, art, antiques and any negotiable instruments.
The trust can make regular disbursements to you or family members. This may be for educational, medical and legal expenses; that is, as long as the trust permits the establishment of these disbursements. When the trust makes these disbursements, the payments are not subject to foreign currency controls.
Immediate Protection
In some jurisdictions, timeframes in which a creditor can bring a fraudulent conveyance claim against trust assets. The timelines in other jurisdictions may last from two to six years. That is not the case in Belize. It does not have any such time period in which trust assets are vulnerable to such claims. As soon as you establish the trust and transfer assets into it these assets are protected from fraudulent conveyance claims. That is provided the trust is established correctly. Whether or not the trust was created after the claim or judgement happened is irrelevant. The protection is immediate.
The Belize Trust Act, Chapter 202, Part I Section 7 (6) Where a trust is created under the law of Belize, the Court shall not vary it or set it aside or recognise the validity of any claim against the trust property pursuant to the law of another jurisdiction or the order of a court of another jurisdiction in respect to,
(a) the personal and proprietary consequences of marriage or the termination of marriage;
(b) succession rights (whether testate or intestate) including the fixed shares of spouses or relatives; or
(c) the claims of creditors in an insolvency.*
*Insolvency means the inability to pay one’s debts.
So, (c) above is a sort of “catch all.” Let’s suppose you do not have the money to pay your debts except that which resides in your trust. Belize trust law says, “Too bad, creditor. You’re out of luck.” Thus, your trust fund helps you averts the your judgment scot-free.
Privacy
There are no legal requirements for auditing Belize trust accounts. Trusts are not open for public inspection. Naturally, you can authorize the trustee or trust agent in writing that a person may inspect the entry of the trust on the register. Thus, your trust is as anonymous as possible.
Belize Court Jurisdiction
Belize’s Asset Protection Trust Act goes to great lengths to reserve jurisdiction over Belize trusts to the Belize courts. For example, when the SEC applied for an order to compel a Belize trustee to hand over specific assets. It also requested that the trustee supply information. The Belize Supreme Court refused it on the grounds that it contravened the Act. As one judge noted, “Section 7(2) of the act provides that only a Belize court has the power to declare a Belize trust invalid. By Section 7(6), Belizean trusts are granted specific immunity against the judgments of foreign courts or claims based on the law of any foreign jurisdiction.
“In a jurisdiction such as Belize, which offers international investors confidentiality and protection of their assets against foreign litigants and which has passed law towards those ends, it is important that judges, mindful of the Legislature’s intention as set out in the law, support these principles of confidentiality, inviolability and exclusivity of jurisdiction.” The bottom line is that Belize will not set aside a trust or the assets transferred into it as long as the trust was legally established.
However, the country has its own fraudulent conveyance law, which does apply when actual intent is proven. Belize also has its own law regarding international trust invalidation. While foreign judgments are not enforceable against a Belize trust, claimants can commence new proceedings in Belize. Of course, this is subject to the country’s laws. Belize courts are debtor-friendly. So the likelihood of the success of such a challenge is small. In fact, we know of no case where such a challenge has reached trust assets.
IBCs
Belize asset protection trusts are often used in conjunction with a Belize International Business Company. Because the trust holds the shares in the IBC, the trust owner receives additional legal benefits. The most popular IBC in Belize is the Belize LDC. The Belize LDC is a limited duration company. It is basically an LLC that you can renew every 50 years. So, you have your Belize trust own 100% of a Belize LDC. You are the manager of the Belize LDC. When there is a legal attack, your trustee can step in as manager of the company and protect you. Thus, the LDC gives you the remote control into the trust assets while the waters are calm. Then makes for a very easy transition when legal storms arise.
Tax Exemption
A trust and its property are exempt from income and business tax. The trust is also exempt from estate, inheritance, gift or succession taxes. Belize considers transactions the trustee carries on the trust’s behalf as stamp duty exempt. The use of such a trust minimizes your taxes and costs. The US, UK, Canadian and Australian governments, for example, tax their people on worldwide income. So, whereas there are no taxes in Belize, you will likely owe tax back home.
Estate Planning
Belize asset protection trusts make good personal estate planning tools. First, the creation of a trust helps you avoid probate. Probate creates a public record and may take considerable time. But you, on the other hand, will have more confidence that your assets remain private. Plus they will end up distributed exactly as planned once you are gone. Only those assets you do not place in the trust are subject to the probate laws of the country in which you reside. Thus, assets outside of the trust assets need to go through the probate process.
There is no forced heirship in Belize. In some countries, the law does not permit the exclusion of certain blood relatives from an estate. This is a concept they call forced heirship. In certain ways, establishing an asset protection trust for estate planning is similar to creating a last will and testament. That is, it divides the estate exactly as you want. However, it is not subjected to rules that could thwart your plans on how you want to divide your assets.
Under Belize law, it is also possible for non-residents to establish private foundations for their estate planning needs. Foundation endowments are exempt from creditor claims. Plus they are exempt from interference from family members of founders and beneficiaries of the foundation. Plus legal proceedings in other jurisdictions will not affect them. Some people put associate a foundation with a trust in a somewhat similar fashion as the LDC/Trust relationship above.
What to Do Now?
Do you want to form a Belize Trust? Do you need asset protection from lawsuits? If so, utilize the consultation form on this page or make contact using one of the phone numbers above.
