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Set Up a Trust in BVI

Updated on Friday 25th September 2020

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The British Virgin Islands are a popular jurisdiction to base an offshore company but also to set up a trust. The trust is a vehicle used for asset protection and planning and the BVI legislation offers a flexible and convenient regime to establish such a legal instrument. 
 
There are two types of trusts in BVI and our British Virgin Islands company formation agents can help you incorporate the one that suits your needs and interests.
 

The parties of a trust

 
The trust is based on the cooperation and the relationship between three distinct parties: 
 
  1. the settlor: is the one who establishes the trust and whose assets will be managed and distributed in due time through this instrument; he can maintain a certain degree of control over the assets and has the power to appoint and dismiss trustees as well as to revoke the trust altogether; the trust may also be established by a legal person;
  2. the trustee: is the one entrusted to legally hold the assets and manage them and is the one responsible for the administration of the trust; the relationship between the settlor and the trustee is a fiduciary one and the trustee shall only act in the best interest of the beneficiaries; the regime in BVI is a convenient one in as that there is no requirement for the trustee to be a resident;
  3. the beneficiaries: are the ones who will enjoy the assets of the trust; they are family members or other individuals; a trust can be set up in such a manner that it will include more than one class of beneficiaries; moreover, the instrument allows the settlor to decide if the beneficiaries will be treated equally or preferentially; the one creating the trust also has the power to intervene and exclude beneficiaries from certain benefits or from future ones.
 
In some cases, a fourth party can take place in the management of a trust. This is the protector who presides over the trustees and can also have powers related to the appointment of new trustees or the exclusion of the beneficiaries. In a sense, the protector is an extension of the settlor and these two parties are also bound by a fiduciary duty. 
 
Our team of BVI company formation agents can give you complete details about the types of fiduciary services available to foreign investors upon request. 

The use of a trust in BVI

 
A trust is an instrument that can be used for a number of purposes related to asset protection and planning. What’s more, the trust can also be used for tax minimization purposes.
 
These types of investment and asset protection vehicles can have a charitable or non-charitable purposes, as defined below by our BVI company incorporation specialists. Regardless, their scope will be defined in the incorporation documents.
 
Our agents summarize the main purposes of a trust in BVI below:
 
  • - Asset protection and management: a settlor can choose to use the trust as an instrument to hold assets in a jurisdiction such as the British Virgin Islands that has political stability;
  • - Preservation: the trust may be used to guarantee the continuity of certain types of assets and for this purpose, the settlor may use the vehicle to guarantee that a business remains within the family;
  • - Succession planning: similar to the previous point, a trust is an instrument that can be used for dividing the assets of the settlor once he passes away;
  • - Heirship: as the assets can be distributed as specified by the settlor, the trust may be used for forced heirship purposes (if the laws in the settlor’s country of origin are rigid, the trust in BVI can be used for this purpose);
  • - Commercial: the trust can also be used for commercial purposes that include asset securitization schemes for receivables.
 
Trusts in the British Virgin Islands are exempt from taxation provided that the beneficiaries are not residents and that the trust does not engage in operations within the BVI. Our British Virgin Islands company formation agents can provide more details on the taxation principles as well as the payable duty for trusts. 
 
The trust is a legal instrument that has multiple applications and it is easily and successfully used primarily for the holding, management, and distribution of assets. It is a widely used instrument for financial planning. 
 
 
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The types of trusts in BVI

 
The table below highlights the main characteristics of the two types of trusts in the British Virgin Islands. One of our BVI company formation agents can answer your questions in case you need more specific information and advice about these two types of trusts.
 
Trait Discretionary Trust Vista Trust
Flexibility The discretionary trust is a more flexible option for investors because there are no pre-defined beneficial interests. The Vista trust is less flexible because it is purposely used solely for company shares.
Confidentiality The discretionary trust is preferred for confidentiality purposes because there are no special accounting or reporting requirements and no mandatory regulations to disclose details about the trustees. The Vista trust is less appropriate for purposes that involve a high degree of confidentiality because of its nature (it is a special form of trust).
Powers  The discretionary trust is formed as per the directions of the trustee and for the specified purposes. In the Vista trust, the trustee has limited powers that can be decided by the settlor.
Duration The discretionary trust has a sufficient duration to fulfill its asset protection purposes (approximately 100 years). The Vista trust has an outstanding longevity compared to other types of trusts (~ 360 years).
 
A trust can also be described as a charitable or a non-charitable one. For the first category, a fixed or discretionary trust may be used for a benevolent purpose such as poverty relief, education advancement, religious purposes, or any other purpose that would bring benefit to the public. Non-charitable trusts are those that are not set up for benevolent activities and strictly related to the protection of assets. However, a trust in BVI should not be set up for a purpose that is immoral, unlawful, or contrary to public policy. Investors also have the option to create trusts that are part charitable and part non-charitable (provided that they comply with the conditions for lawfulness). In other cases, the purpose of the trust may be philanthropic although not charitable, such as a trust that promotes a certain political agenda. 
 
The flexibility in the set up of trusts in the BVI, the fact that this is an instrument that may be used for multiple purposes, is one of the core features that make it attractive to foreign investors.
 
Our BVI offshore company incorporation agents can answer any questions about the set up of these trusts which will also imply opening a BVI registered company.

BVI incorporations statistics 

 
The Financial Services industry is a developed one in the British Virgin Islands and, as seen in this article, investors have noteworthy advantages when choosing to set up a trust. The BVI Financial Services Commission, in its publication known as the Quarterly Statistical Bulletin, monitors incorporations as well as the general state of the industry. Below, our BVI company formation agents highlight the most important data presented in the most recent publication:
 
  • - Incorporations: in the first quarter of 2020 there have been 5,275 total incorporations in the British Virgin Islands;
  • - Private trust companies: the first part of 2020 saw the registration of 16 private trust companies; the total number of registrations for these was of 1,129 at the end of March 2019;
  • - Class I trust licenses: at the end of March 2020 there were 59 licenses for these types of trusts;
  • - Class II and III trust licenses: also at the end of March 2020 there were 30 licenses for the Class II and 22 for the Class III trusts; our BVI company incorporation agents can provide you with more details on the Banks and Trust Companies Act and the classes of trust licenses. 
 
Contact us for more details about fiduciary services and trusts in BVI.

 

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Call us now at +44 203 287 0408 to set up an appointment with our business consultants in the British Virgin Islands. Alternatively you can incorporate your company without traveling to the British Virgin Islands.

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