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Asset Protection Trusts (APT)

The three best jurisdictions for Asset Protection Trusts in the world are Belize, Nevis and the Cook Islands. The following describes the Belize APT. Nevis and the Cook Islands share many of the same advantages, and we provide trust formation and trustee services in each of these venues.

The Belize Asset Protection Trust

Belize’s Trust law is one of the strongest and most flexible asset protection trust legislations in the world and highly favored by our company President and offshore expert, Hoyt Barber, for offshore estate planning, asset protection and investment purposes.

The primary benefit of a trust is that it allows the legal ownership of property to be distinguished and separately vested from the enforceable rights of use and enjoyment of that property. This makes the trust, particularly when established in Belize, an extremely flexible, sophisticated and creative instrument for asset protection, tax, estate, and investment planning, and the preservation of confidentiality.

Where a trust is created under the law of Belize, Belize courts shall not vary it nor set it aside or recognize 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 of the personal and proprietary consequences of marriage or the termination of marriage, succession rights (whether testate or intestate) including the fixed shares of spouses or relatives, or the claims of creditors in an insolvency. Unlike trust legislations in other offshore jurisdictions which simply reduce the period of limitation for initiating proceedings for fraudulent conveyances/transfers, Belize’s trust law has actually repealed the law against fraudulent conveyances/transfers in relation to a trust. Further, the reciprocal enforcement of judgments legislation does not apply to a trust so that a fresh proceeding would need to be brought in Belize in every instance involving a Belize trust. No other trust legislation in the world provides the level of asset protection available in Belize.

In practice, Belize trusts are extremely flexible and can accommodate numerous asset protection clauses. Belize trusts in fact typically are discretionary trusts and include distress or flee clauses whereby the jurisdiction or proper law and situs of administration automatically changes when a distress occasion arises—for example, threat of litigation against the trust or the trust fund—although the popularity of such provisions have waned recently. Such trusts may also provide for automatic successor trustee and protector provisions. Spendthrift provisions may also be utilized to limit the rights of the beneficiary.

Belize trust law offer maximum flexibility and the highest of asset protection through its additional chameleon-like feature that certain aspects of a Belize trust may be governed by laws of different countries, when advantageous, and back again—or to yet another country.

Although discretionary trusts have been most widely used, the non-charitable purpose trust may also be established under Belize law for asset protection purposes. For example, a settlor may settle such a purpose trust which in turn will form a Belize IBC for certain business and investment purposes. The corporation may then pay income to the settlor. The benefit of this structure is that a creditor can’t discern who owns the corporation and further, given that the structure is offshore, would have difficulty garnishing payments made by the corporation to the settlor. Of course, the corporation may also be used to conceal ownership of assets so long as it is not done for any unlawful purpose. Such purpose trusts may also be mixed to benefit persons as well. The trustees are then given the discretion to determine how the trust may be paid out: to the beneficiaries or to further the purpose. This of course gives additional asset protection since—to the creditor’s disadvantage—the trustee may exercise his discretion to simply pay out to further the purpose instead of to the beneficiaries.

There is no requirement for the registration of a trust. Nevertheless, the Act does provide for the optional registration of trusts. The Register of Trusts is not open to public inspection except that the trustee of a trust may, in writing, authorize a person to inspect the entry of that trust on the Register.

The trustee of a trust has a duty of confidentiality. Subject to the provisions of the Act and to the terms of the trust, and except as is necessary for the proper administration of the trust or by reason of any other Act, the trustee of a trust shall keep confidential all information regarding the state and amount of the trust property or the conduct of the trust administration. There is no legal requirement to audit accounts. There is no requirement to disclose the names of any beneficiaries under a trust.

A Belize offshore trust and its trust property is exempt from income and business tax, estate, inheritance, succession or gift tax and all instruments relating to the trust property or to transactions carried out by the trustee on behalf of the trust shall be exempt from stamp duty. Moreover, the trustee of a Belize Asset Protection Trust shall be regarded as not resident in Belize and shall be exempt from exchange control with regard to the trust property and to all transactions carried out by the trustee on behalf of the trust.

Subject to the terms of the trust, and to the provisions of the Act, a trustee of a Belize trust may invest any money requiring investment in any investment or property of whatsoever nature and wheresoever situated and whether producing income or not and whether involving any liability or not and upon such security if any as the trustee shall in his absolute discretion think fit as if the trustee were the absolute owner thereof, and which protects the settlor, the beneficiaries, and the trust assets.

To discuss a Belize Asset Protection Trust, please contact our office at 604-657-8689. We also offer a Panama foundation to non-U.S. persons as an alternative to an asset protection trust. Further information and costs are available on the foundation by calling us today.

For further reading on the offshore trust and foundation, please read Hoyt Barber’s book, Freedom Without Borders: How to Invest, Expatriate and Retire Overseas for Personal and Financial Success, (2011), published by Praeger Publishing, or Tax Havens Today: The Benefits and Pitfalls of Banking and Investing Offshore (2007), published by John Wiley & Sons., Inc., both available through Amazon.com and any other major bookseller.

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