St Vincent and the Grenadines is considered a popular trust jurisdiction. The International Trusts Act 1996 (“ITA”) is the definitive law for governing the creation and administration of international trusts in SVG.
Dennings (Barristers & Solicitors) is able to assist in establishing your offshore trusts by providing the following services:
- Drafting trust deeds prior to execution (and if required, registration) of the international trust;
- Preparing letters of wishes to be passed between Settlor and the Trustees;
- Through a corporate entity, act as Protector to an international trust.
Amongst the types of trusts offered, it is generally considered that the reserved powers trust (often termed “settlor controlled” trust) is the most popular amongst clients. Such trusts are particularly useful to those clients who wish to retain substantial control over the management of the trust assets. Our clients generally find that by establishing an underlying SVG IBC and placing their shares in reserved powers trusts (while simultaneously maintaining control of this underlying company) is a very effective way of managing their affairs.
Section 36 of the International Business Companies (Amendment and Consolidation) Act 2007 (“IBCA”) provides that where voting shares of an SVG international business company are settled into a unit trust the proper law of which is the law of SVG or into a trust established under the ITA, the trustees of such trust shall have an overriding duty to hold the shares but no duty to enquire into or take any active part in the management of the company unless otherwise provided in the trust deed or the company’s constitution.
Reserved powers /settlor controlled trusts are provided for under SVG law as the ITA provides that an international trust will not be declared invalid or affected in any way if the settlor:
- retains, possesses or acquires a power to revoke the trust;
- retains, possesses or acquires a power to amend the trust;
- retains, possesses or acquires any benefit, interest or property from the trust;
- retains, possesses or acquires the power to remove or appoint a trustee, protector or advisor;
- retains, possesses or acquires the power to direct a trustee or protector on any matter;
- retains, possesses or acquires any specific power to appoint the capital or income from the trust to persons other than himself;
- is a beneficiary of the trust solely or together with others; or
- purports to direct the activities of a trustee through a letter of wishes or similar statement or document made or delivered to that trustee in connection with and at the time of creation of an international trust.
Discretionary Trusts (with a Protector) are more suited to clients who wish to dispose of their assets without recourse.
Some key provisions of the ITA are as follows:
- The ITA dispenses with the rules against perpetuity and accumulations. Instead, international trusts may exist for a maximum duration of 120 years, though purpose trusts and charitable trusts may continue in existence without time limit.
- The Statute of Elizabeth has no relevance to international trusts or to dispositions or transfers to or by international trusts formed under the ITA. The application of that statute has been explicitly excluded by section 50 of the ITA. Similarly, the impact of forced heirship rules existing in any foreign country has been excluded, and no international trust or any aspect thereof (including the disposition of property) shall be declared void, voidable or defective in any manner for any reason related to a lack of capacity (purported or otherwise) on the part of the settlor.
- Section 16 makes provision for an international trust to have a Protector, who may be the settlor himself, a trustee, or a beneficiary. Unless otherwise excluded in the trust deed, the Protector owes fiduciary duties to the beneficiaries or to the purpose for which the trust is created. Explicit powers are given to the Protector. These include the power to appoint and remove trustees, the power to change the proper law of the trust, the right to receive notice in advance of specified actions of the trustees, and the right to receive information and accounts pertaining to the trust.
- The effect of foreign law is excluded by section 33 and the capacity of a settlor to create a trust may not be called into question by such foreign law. Further, no disposition of property under the trust may be varied, declared void or voidable or otherwise set aside by reason of the application of such foreign law.
- By section 39, notwithstanding the provisions of any treaty, convention, statute, rule of law or equity to the contrary no proceedings for the enforcement or recognition of a judgment or order obtained outside SVG will be entertained by the court if the judgment or order is based wholly or partly on the application or interpretation of law which is inconsistent with the ITA, or relates to a matter governed by the laws of SVG.
Confidentiality and Disclosure under the ITA
Except in the case of a trust advisor appointed under the trust deed (or by the trustees or the protector) no person (including the trustee and protector) may disclose to any other person not legally entitled to it, any of the following information or documents respecting an international trust:
(a) the name of the settlor or any beneficiary;
(b) the trustees' deliberations as to the manner in which a power or discretion was exercised or a duty conferred by the terms of the trust or by law was performed;
(c) the reason for the exercise of the power or discretion or the performance of the duty or any evidence upon which such reason might have been based;
(d) any information relating to or forming part of the accounts of an international trust; or
(e) any other matter or thing respecting an international trust.
The Registered Trustee must, at the written request of a beneficiary named in the trust, disclose any document or information relating to or forming part of the trust accounts. This entitlement does not however extend to letters of wishes or like expressions of the settlor's intent.
Rights of Creditors under the ITA
Any claimant wishing to challenge or proceed against an international trust or sue the trustees for breach of trust must do so within 2 years from the date of creation of the trust or from the date the cause of action arose. Before commencing his claim, the claimant must pay a cash sum of US$25,000 into court as security for costs.
Provided that the settlor was not insolvent at the time the trust was created, did not become insolvent by virtue of its creation, and did not establish the trust with intent to defraud creditors the trust will not be declared void or voidable in the event of the settlor's bankruptcy or insolvency.
In addition to acting as co-trustees to an SVG trust, one of our corporate entities is prepared to act as protector in relation to any foreign trust established by our clients.