A trust is a legal relationship created when a person places assets under the control of another person for the benefit of beneficiaries or a specific purpose. BVI trusts may be created for a number of reasons, including:
? As an instrument for succession planning in the event of death or incapacity
? To mitigate against tax liabilities
? To protect assets (eg from exchange controls or other government interference)
? As a confidential way of holding assets
? To protect beneficiaries who have difficulty in managing their own affairs
? To circumvent forced heirship rules
? To hold shares in a family company or in corporate transactions
? As a vehicle for philanthropic giving
Rather than requiring identifiable beneficiaries, the BVI enables trustees to hold property on trust to carry out purposes which cannot be classed as charitable. Purpose trusts must have a purpose that is specific, reasonable and possible; it may not be immoral or contrary to BVI law; at least one trustee is a “designated person;” and the trust instrument must appoint an enforcer, who cannot be a trustee and who must be provided with information about the trust accounts and copies of all trust deeds.
Charitable and purpose trusts may exist indefinitely, while all other trusts may exist up to 360 years. The BVI allows for reserved powers, where the settlor may retain certain decision making abilities over the trustee. This may include determining the law of which jurisdiction shall govern the trust; changing the forum of the administration of the trust; removing and appointing new trustees; and excluding and including beneficiaries.
BVI trusts may be discretionary or fixed interest in nature, meaning that the trust assets can either be held for a class of beneficiaries with distributions being made at the discretion of the trustee or alternatively the trust deed can set out the specific beneficial interests of each beneficiary, such as a right to the income earned by the trust assets.