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Seychelles International Trust for Tax and Asset Management- learn how to setup!

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, 09-05-2010 at 01:08 PM (1818 Views)
The primary benefits of the Seychelles International Trust are in terms of the opportunities it offers by way of Tax minimisation, Financial Planning, Succession planning and Financial Privacy. The law also contains strong asset protection provisions.

Neither the name of the person establishing the Trust nor the persons who are to benefit from the Trust are disclosed to the Registry. Upon registration the Registrar simply issues a sealed letter confirming registration and specifying the name and registration number of the Trust.

The Seychelles International Trust also has significant appeal as a holding vehicle wherein it is deployed to hold shares in an IBC as this can enable the would be beneficiaries to defer or avoid tax on the profits of the IBC for an indefinite period.

Features & Benefits of Seychelles International Trusts

Other features of Seychelles Trusts include:

* A Seychelles Trust pays no taxes in Seychelles on its foreign income
* A copy of the Trust Deed is not required to be filed with the Registry
* A Seychelles International Trust can own property anywhere (except for land in Seychelles; though it can own shares and/or maintain bank accounts here)
* The Settlors or Trustees can themselves be Beneficiaries of the Trust
* The Settlor can choose whatever country’s laws he prefers as the laws by which the Trust is to be governed
* Someone resident outside Seychelles may be appointed as a co-Trustee
* There is no requirement to mention the names of the Settlor or the final Beneficiaries in the Trust Deed
* The transfer of Property to a Seychelles Trust cannot be overturned by any foreign laws as to forced heirship
* A Seychelles International Trust cannot be voided by reason of a Settlor becoming bankrupt.
* The only way that a Settlor’s creditors can attack a Seychelles Trust is by commencing legal action against the Trustee in the Seychelles Supreme Court seeking to have the Trust declared a sham.
* Any legal action to claw back assets transferred to a trust, must be brought within two years of the date of transfer of the disputed asset to the Trust.

Settlor’s “wishes”
Whilst the Trustees administer the trust at their discretion, a Letter or Expression of “Wishes” is commonly provided by the Settlor, setting out his or her wishes in relation to administration of the trust, including with respect to o distributions, timing of distributions, deletion or substitution of beneficiaries and etc. Though not bound by the Expression of wishes the Settlor’s wishes are commonly respected so as to ensure that the legal integrity of the Trust (in terms of its aim to assist the proposed beneficiaries) is maintained.

Asset Protection Provisions
The Seychelles International Trusts Act 1994 ("the Act") provides:

* “that notwithstanding any foreign laws, an international trust shall not be void by reason of the settlor's bankruptcy or liquidation of the settlor's property or in any legal action against the settlor by the settlor's creditors (except where the Seychelles Supreme Court finds beyond reasonable doubt that the trust was made with the intent to defraud creditors of the settlor or the settlor was insolvent at the time when the property was vested in the trustee. The onus of proof as to intent to defraud rests on the creditor claimant)” &
* “that a legal claim by a creditor shall not be permitted against a trustee of an international trust after 2 years from the date of transfer of assets into the trust. “
* This affords a would be legal claimant a very narrow opportunity to "attack" a Seychelles trust. In addition to the 2 year legal claim limit period, a claimant creditor ALSO has to prove his or her case "beyond reasonable doubt" (Which is higher than the usual civil onus of "on the balance of probabilities").
* Confidentiality
* Although a Seychelles International Trust is "registered" and a registration number allocated, the Trust Deed does not have to be filed with the Registry.
* There is no requirement to file with the Registry details of the Settlor or the beneficiaries (except for any beneficiaries who are Seychellois nationals)
* No information or document relating to an international trust can be made public, except by order of the Seychelles Supreme Court on application made by the Seychelles Attorney General and then only for the purpose of an inquiry into or trial relating to drug trafficking, arms trafficking or money laundering.
* Forced heirship
* Seychelles has strong anti-forced heirship provisions with regard to trusts. Neither an international trust nor any transfer or disposition of property to the trust can be invalidated by any foreign rule of forced heirship, nor because the trust concept is unknown to or not admitted by the laws of the foreign jurisdiction

Accumulation
Under the Act, there are no restrictions on the accumulation of income:

* A trustee is allowed, (like under the terms of most typical discretionary Trust Deeds), a "power to accumulate", ie to save the income as it arises rather than distributing it to the beneficiaries (which is very useful for tax avoidance/deferral purposes)
* The accumulations can be directed towards either “capital” beneficiaries or to towards “income” beneficiaries.

Establishment
To establish a Seychelles International Trust Registration you need only:

* File a brief declaration by the Trustee with the Registry, declaring that the Settlor of the Trust is a non Seychelles resident; that the Trust property does not include any land in Seychelles; and advising of the name and date of the Trust.
* Make a one off payment to the Registry of US$ 100.
* Miscellaneous
* A Seychelles Trust must be administered by a Seychelles Licensed Trustee.
* Non-resident co-trustee/s and/or protectors may also be appointed
* A Seychelles International Trust can own property anywhere in the world (except for land in Seychelles; although it can own shares and/or maintain bank accounts in Seychelles)
* The Settlor/s can also be a beneficiary of the International Trust (but not a sole beneficiary)
* The Settlor cannot at any time during the duration of the Trust be a resident of Seychelles
* There is a 100 year time limit on the length of the Trust at which time the law provides that the Trust will then terminate, unless terminated earlier either pursuant to the trust terms or for any other reason (charitable trusts or purpose trusts excepted).
* The Act requires a Beneficiary of an International Trust to be:

(a) identifiable by name; or
(b) ascertainable by reference to either:

(i) a class; or
(ii) a relationship to another person, whether or not living at the time of the creation of the trust or at the time by reference to which, under the terms of the trust, members of a class are to be determined. Some examples of "unnamed" beneficiaries - where the trust deed includes as a beneficiary the settlor's children and remoter issue; and the spouses, widows and widowers of the settlor's children.
The law governing an International Trust is the law chosen by the Settlor to be the proper law

Redomiciliation

* Seychelles international trusts can migrate and can be administered from Seychelles or elsewhere.
* The terms of an international trust may also provide for a change in the proper law of the trust, but a change is only valid if the new proper law venue recognizes the validity of the trust and the interest of the beneficiaries. (The Hague Convention has been ratified by Seychelles).

Yes it makes sense from both a tax planning and asset protection perspective to have a PIF or Trust owing the shares of an IBC. Particularly the Foundation is a useful structure as the law here makes it plain that the owner of assets held by the Foundation is the Foundation not the beneficiaries thereof. That presents huge tax planning opportunities. See attached brochures which may be of use.

Please do not hesitate to contact us for more information.

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  1. Admin's Avatar
    • Foundation:
    A Foundation is both a legal arrangement and a separate legal entity whereby one entity (called the Board of Governors or Councillors) at the request of a second person (called “the Founder”) on behalf of the Foundation agrees to accept and hold and deal with property for the benefit of others (ie the Beneficiaries). In Seychelles the Founder can be both Founder and Beneficiary though not sole beneficiary.

    • Founder: A Founder is the person who establishes the Foundation. This is done by requesting us to establish a Foundation on certain conditions and also by moving legal ownership of certain property to the Foundation to hold under the terms of the Charter for the benefit of the Beneficiaries. A minimum of one Founder is required. Please note however that if assets, which are jointly owned by two (or more) persons, are to be transferred to the Foundation it may be more appropriate for the Foundation to be established at the request of joint Founders. If jointly owned property is to be transferred to the Foundation local legal advice should be sought as to whether it is desirable, taking into account the law in the Founders’ place of residence, for the Foundation to be established by one or more Founders.

    • Foundation Charter:

    Is a document which effectively gives birth to the Foundation. A Charter sets out the fact that the Foundation is to hold certain property for the benefit of others (ie the Beneficiaries). A Charter also sets out the arrangements by which the Board of Governors is to deal with the Foundation Property. It is like a contract between the Board and the Founder/Beneficiaries.

    • Beneficiaries: the Beneficiaries of are the person/s for whose benefit the Foundation is established. Foundations are designed to ensure that the beneficiaries receive some kind of financial or lifestyle benefit from the Foundation and its assets. Such benefit may be by way of payment/s of income from the Foundation. Alternatively the Foundation may provide for certain assets/capital to be transferred to a Beneficiary (or Beneficiaries) at a certain time.

    • The Board of Governors or Councillors: is a management committee or company that:

    1. accepts a transfer of property at the request of the Founder on behalf of the Foundation; and
    2. agrees to manage the Foundation and its assets for the benefit of the beneficiaries in accordance with the terms of the Charter.

    • Protector: A Protector is a person whose prior consent is legally required ahead of the Board of Governors doing certain key things. For example the Protector’s permission may be required prior to:
    (a) the Board adding or excluding Beneficiaries; and/or
    (b) making (or changing previous arrangements for the) payments of income; and/or
    (c) removing or adding Governors etc.

    It is preferable that the Protector’s permission be required for only certain key things otherwise it could be alleged that the Protector is controlling the Foundation. This could lead to the Foundation being made liable to pay tax in the country where the Protector resides. A Protector may be appointed from the outset (in which case his/her name may appear in the Charter) or at a later time should you so wish).

    Please note Carefully
    This document is to be used as an initial tool to assist with the drafting of the Foundation Charter. Additional details or further Expressions of Wishes may be sought or required prior to Formation. That way we can be certain that the Foundation accurately takes into account your wishes as expressed. It is of paramount importance that clear and precise instructions be delivered to us.

    We are not in the business of providing legal, accounting, taxation or investment advice. We always recommend that clients seek such advice from a suitably qualified expert before ordering IBCs or International Trusts or PIFs from us. Clients should also seek expert professional advice as to any prohibitions, limitations and/or disclosure requirements to which they may be potentially subjected as a consequence of ordering (or in any way dealing with) an IBC or Trust or PIF supplied by us.
  2. Admin's Avatar
    EXPLANATION OF TECHNICAL TERMS USED for Trusts

    • Trust:
    A Trust is a legal arrangement (not unlike a contract) whereby one person
    (called the Trustee) at the request of a second person (called “the Settlor”)
    agrees to accept and hold property for the benefit of others (ie the
    Beneficiaries). In Seychelles the Settlor of a Trust can be both Settlor and
    Beneficiary.

    • Settlor: A Settlor is the person who establishes the trust. This is done by requesting us to establish a Trust on certain conditions and also by moving legal ownership of certain property to the Trustee to hold under the terms of the trust for the benefit of the Beneficiaries. A minimum of one Settlor is required. Please note however that if assets, which are jointly owned by two (or more) persons, are to be transferred to the Trust it may be more appropriate for the Trust to be established at the request of joint Settlors. If jointly owned property is to be transferred to the Trust local legal advice should be sought as to whether it is desirable, taking into account the law in the Settlors’ place of residence, for the Trust to be established by one or more Settlors.

    • Declaration of Trust (also known as a “Trust Deed”):

    1. Is a document which effectively gives birth to a Trust. A Declaration of Trust sets out the fact that a Trustee is holding certain property for the benefit of others (ie the Beneficiaries). A Declaration of Trust also usually sets out the arrangements by which the Trustee is to hold and deal with the Trust Property. It is like a contract between the Trustee and the Settlor/Beneficiaries. Within the document the Trustee declares that he/she/it holds particular property on certain conditions. These conditions are called the “terms of the Trust”.
    2. A Declaration of Trust is usually used as the method by which to establish a Trust when the person moving assets into the trust does not wish to be named as Settlor in the document establishing the Trust.
    3. A Trust can also be established by way of a “Settlement”. A Settlement is a document in which the Settlor records the transfer of certain property to a Trustee. Unlike a Declaration of Trust the Settlor’s name does appear in the document. Either method can be used to establish a Trust. Unless you or you or your lawyer request otherwise we will establish the Trust by way of a Declaration of Trust. You should receive local expert legal and taxation advice as to which should be your preferred way of establishing the Trust having regard to local legal and /or taxation issues.

    • Beneficiaries: the Beneficiaries of a Trust are the person/s for whose benefit the Trust is established. Trusts are designed to ensure that the beneficiaries of the Trust receive some kind of financial or lifestyle benefit from the Trust and its assets. Such benefit may be by way of payment/s of income from the Trust. Alternatively the Trust may provide for certain Trust assets/capital to be transferred to a Beneficiary (or Beneficiaries) at a certain time.

    • Trustee: A Trustee is a person or company that:

    1. accepts a transfer of property at the request of the Settlor; and
    2. agrees to manage the Trust and its assets for the benefit of the beneficiaries in accordance with the terms of the Trust Deed.

    • Protector: A Protector is a person whose prior consent is legally required ahead of the Trustee doing certain key things. For example the Protector’s permission may be required prior to:
    (a) the Trustee adding or excluding Beneficiaries; and/or
    (b) making (or changing previous arrangements for the) payments of income; and/or
    (c) removing or adding Trustee/s etc.

    It is preferable that the Protector’s permission be required for only certain
    key things otherwise it could be alleged that the Protector is controlling
    the Trust. This could lead to the Trust being made liable to pay tax in the
    country where the Protector resides. A Protector may be appointed from
    the outset (in which case his/her name would appear in the Trust Deed) or
    at a later time should you so wish).

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