In the early history of the British Empire, trusts were instituted in order to allow families to preserve their wealth without subjecting them to burdensome taxes when the estate owner died. Since that time, the basic trust structures established hundreds of years ago have been refined to meet the requirements of our complex modern society.

What is a Trust?

A trust is a private legal relationship that arises when at least one person holds property for the benefit of another. Although the terms of a trust relationship are not required to be in written form to be valid, the safest way for all parties to a trust to protect their interests is for the terms of the relationship to be preserved in a document known as a Trust Deed, sometimes referred to as a Trust Settlement

How is a Trust structured?

Generally, the primary parties to a trust can be classified as follows:

SETTLOR:

The Settlor is the person or entity who is putting the property into a trust. This property is generally called the "trust fund" or "trust estate." A Settlor may be an individual, a corporation or other business entity, or even another trust.

BENEFICIARY:

The Beneficiary is the person or entity for whose benefit the trust fund is held by the Trustee. Generally, a Beneficiary may be an individual, a company or other business entity, a group of people, a charity or any identifiable party. Although the Trustee acts in the interests of the Beneficiary, the Trustee is generally given discretion over how to manage the trust fund and the conditions under which distributions may be made to a Beneficiary. Usually, the Trust Deed allows the Trustee to appoint new Beneficiaries, add new classes of Beneficiaries or even exclude Beneficiaries from the trust.

TRUSTEE, OR BOARD OF TRUSTEES:

The Trustee is the person or company in charge of the Trust, and who holds and manages the trust fund for the benefit of the Beneficiary. There may be more than one Trustee (such as a multi-party Board of Trustees) appointed over a single Trust. The Trustee generally has broad discretion over how to control the trust fund, what types of investments may be made, and whether, and to whom, a distribution of trust property may be made. Although the Settlor and the Beneficiary of a Trust may make their desires about the trust fund known to the Trustee, through a "Letter of Wishes," the Trustee is not legally required to follow those desires. It is for this reason that the word "trust" is used in connection with this legal relationship. Both the Settlor and the Beneficiary must "trust the Trustee" to manage and control the trust in the most effective, honest and wise manner possible. In selecting a Trustee, a Settlor should look for a well-established professional who is, above all, trustworthy.

PROTECTOR:

Most offshore trusts provide for a Protector. The Protector is an individual or company, independent and separate from the Trustee, which has the power to oversee the actions of the Trustee. The Protector may remove and replace the Trustee if the Protector believes that it is in the best interests of the Beneficiaries to do so. Some trusts limit the Protector's powers, while others grant the Protector broad power to approve or even veto decisions made by the Trustee. As with the Trustee, the Settlor and the Beneficiary may make their desires known to the Protector, but the Protector is not required to follow those desires. In order to maintain the independence of the Protector, it is generally a good idea for the Protector to be a resident of a jurisdiction other than the country of residence of the Settlor, as well as other than the country of residence of the Trust.

JURISDICTION:

This is the country where the Trust resides. If the country is not the country where the Settlor resides, or is a citizen, it is considered to be "offshore." The laws of this country govern the administration of the Trust. It is our opinion that Belize, an independent, English-speaking British commonwealth country in Central America, presently has the finest trust laws in the world. IBC recommends Belize as the choice of jurisdiction for almost any trust.

What advantages are there in an offshore Trust?

There are several reasons why clients choose to establish a trust offshore ("offshore" simply means a country other than the Settlor's country of residence or citizenship). Among those reasons are:

a) Robust Asset Protection- A creditor who wishes to attach Trust assets must go to a foreign country to do so - a country with laws very favorable to protecting the Trust assets.

b) Confidentiality of Financial Affairs- The privacy of financial transactions is zealously guarded under the laws of Belize.

c) Ownership of Property in Foreign Countries- The offshore trust is the perfect vehicle to own personal property and real estate in foreign countries.

d) Possible Tax Mitigation- There may be tax advantages to establishing an offshore trust. IBC recommends consultation with your tax and legal advisers in this regard.

e) Access to International Investments and Diversification- An offshore trust may invest in international funds, such as mutual funds or hedge funds, that may not be available to "onshore" traders. Usually, this is done through an International Business Company ("IBC"), owned by the trust.

f) Estate planning- An offshore trust may be an essential part of an estate plan, which might include a domestic trust, a will and any number of business entities. IBC works with a client's tax and legal adviser to integrate an offshore trust into a client's overall estate plan.

What is the Belize Trust Act of 1992?

At the forefront of the Belize offshore industry is the modern and flexible Trusts Act of 1992. The Act was drafted by legal counsel from the United Kingdom, with valuable input from American legal advisers. Under the Act a general (non-charitable) trust may be established in Belize for up to 120 years, and a trust created exclusively for charitable purposes may be established in perpetuity (no time limit).

Should a Trust own an IBC (International Business Company)?

An IBC is the working entity of a trust, enabling it to engage in buying or selling of securities, maintaining bank accounts, owning property and performing other business functions. A trust and trust-owned IBC may take advantage of Belize's strict privacy laws, and do their business without having all details of those business transactions known to the general public. Often, trusts maintain ownership in numbers of companies. These companies may hold assets separately, which may increase asset protection.

Should a Protector Company be appointed?

It is wise to appoint a Protector or Protector Company, in order to provide added protection and to oversee the Trustee and the Trustee's decisions. In order to maintain the independence of the Protector, it is a good idea for the Protector Company to be offshore (a resident of a country other than that of the residence or citizenship of the Settlor, and thus not subject to the laws of Settlor's jurisdiction), and also a resident of a country other than the country of residence of the Trust (and thus not subject to the law that governs the Trust). IPC Corporate Services LLC recommends a St. Vincent Protector Company, Fidelity Services Limited, which provides independent and "arms-length" protector services. Annual fees for protector services are approximately $1,200.

How much does all this cost?

IPC Corporate Services LLC's trust service includes consultation with the client and any tax or legal adviser, completion of the trust formation, employment of a fully licensed and insured Belize trustee, employment of a Protector Company, and formation of an International Business Company, to be owned by the Trust (the IBC formation includes all of the items outlined on the IBC page). IPC's cost for these services is: