British Virgin Islands: Christopher Mckenzie Analyses The Significant Amendments To VISTA And Other BVI Trust And Estate Legislation

Last Updated: 5 August 2014
Article by Christopher McKenzie

With effect from 15 May 2013, some important changes were made to the Virgin Islands Special Trusts Act (VISTA), the Trustee Ordinance, 1961 (Trustee Act) and various other BVI statutes relating to trusts and estates. The main alterations are discussed below.

Amendments to VISTA

Trusteeship of VISTA trusts

The BVI's VISTA legislation has been amended so that co-trusteeship of VISTA trusts is now permitted. Furthermore, the statute now allows the qualifying trustee of a VISTA trust to be an unlicensed BVI private trust company (PTC), as an alternative to a licensed BVI trustee. Thus clients have several options when selecting trustees of VISTA trusts: the sole trustee may either be a licensed BVI service provider or a BVI PTC; alternatively, one or more foreign companies or individuals may act as co-trustee together with the licensed BVI trustee or BVI PTC. These changes in the law should provide significant opportunities for family-controlled VISTA trusts to be established and for service providers without a BVI-licensed trust company to provide co-trusteeship of VISTA trusts (or to establish a PTC to be sole trustee).

Transfer of assets to VISTA trusts from other trusts

The restrictions in VISTA that, inter alia, prevented assets from being appointed out of other trusts (transferor trusts) to existing (or new) VISTA trusts in the exercise of powers of appointment (and other powers) and that prevented trusts from being converted into VISTA trusts have been relaxed. Such powers may now be exercised with the result that the assets of transferor trusts become subject to the VISTA regime, provided two conditions are satisfied:

(a) the transferor trust must be governed by BVI law at the time of the exercise of the powers; and

(b) at that time, one of its trustees must be a licensed BVI trustee or an exempt BVI PTC.

This reform provides significant opportunities for assets of existing trusts to be VISTAised and for advantage thereby to be taken of the BVI's special alternative trust regime, which has been designed for situations (a) in which the trust assets comprise shares in companies, (b) in which unusual investments are to be held in trust, and (c) in which the settlor or those nominated by the settlor are to retain investment and other administrative powers (in the capacity of director(s) of an underlying company).

Anti-abuse provisions and other amendments to VISTA

Various other amendments to the statute have been made to ensure that the trustees of VISTA trusts are entitled to information about underlying companies and their subsidiaries (i.e. so that they can protect themselves against unforeseeable reputational risks) and to provide flexibility. The latter amendments make it clear that a trust that is not initially subject to the VISTA regime can become so subject at a later date or upon the occurrence of a specific event (and vice versa).

Amendments to the Trustee Act

The Trustee (Amendment) Act, 2013 includes the following changes to the Trustee Act (which applies to both VISTA and non-VISTA trusts):

Extension of the perpetuity period

The BVI has refrained from following other jurisdictions in abolishing the rule against perpetuities on the basis that there are sound reasons of policy for providing for a maximum perpetuity period (the purpose of the rule is essentially to prevent property from being tied up indefinitely). However, the maximum permitted perpetuity period (which is inapplicable to charitable and non-charitable trusts) has been extended from 100 years to 360 years. This should provide a significant incentive for settlors who wish to set up dynastic trusts that last many generations to select BVI law as the governing law of their trusts.

Trusteeship of purpose trusts

A condition for the establishment of a BVI non-charitable purpose trust is that one of its trustees must be a 'designated person'. Prior to the enactment of the recent reforms, this would invariably have required one of its trustees to have been a licensed trustee. The condition has however now been relaxed so that the qualifying trustee may instead be an exempt BVI PTC.

Trust duty

BVI trust duty has been increased to USD200. The duty is payable on settlements and declarations of trust, but not on supplementary trust instruments, and instruments recording bare trusts and charitable trusts are exempt. The duty is payable by affixing revenue stamps for the requisite amount to the relevant trust instrument. An 'authorised person' (such as the settlor, the trustee or a lawyer acting for either) must 'cancel' these in the manner prescribed by s92 of the Trustee Act. Confidentiality is maintained since the document is not – and indeed the statute prescribes that it cannot be – submitted to the authorities to enable the duty to be paid. Penalties are payable if the trust duty is not paid within the prescribed period and the consequence of omitting to pay the duty is that the relevant trust instrument is inadmissible in civil proceedings unless the duty and penalty are paid and unless the judge exercises their discretion.

Trustees and loans

Section 101 of the Trustee Act (which applies only if the terms of the trust expressly so provide) permits a trustee, for the protection of a third party that has lent money to it, to restrict the exercise of its other powers (such as investment and distribution powers and powers to retire) provided certain conditions are satisfied. To add flexibility, and to reflect the reality of the modern world of commerce, the provisions of s101 have now been extended to cover loans of trust assets other than money.

Amendments to the BVI's PTC regulations

Extension of the 'related trust business' head of the exemption

The BVI's regulations relating to PTCs enable BVI companies to be established to act as trustees and protectors provided certain conditions are satisfied. The conditions are that the name of the company must include the initials '(PTC)' before the permitted ending (such as 'Ltd'), that the company's registered agent must hold a Class 1 trust licence, that the company must not offer its services as trustee/protector to the general public, that the company must only carry on trust business and that all its trust business must be 'unremunerated trust business' (so that neither the company nor anyone associated with it – other than a professional director – charges for its services as trustee/ protector) and/or 'related trust business'. A company will be regarded as carrying on related trust business where all the beneficiaries of the trust (or trusts) of which it is trustee are related (in the prescribed manner) to the settlor (and, in the case of multiple trusts, the settlors are related to each other) and/or are charities.

The regulations have proved to be extremely popular and numerous BVI PTCs have been set up. However, until the amendments came into effect most BVI companies will have relied on the 'unremunerated trust business' head of the exemption. This was because the 'related trust business' head of the exemption was inapplicable where the beneficiaries of the trust(s) included the settlor(s). The regulations have now been amended so that the related-trust business head of the exemption is no longer inapplicable where settlors are beneficiaries. This amendment is likely to result in increased use of the BVI's PTC regulations since (provided the other relevant conditions are met) it permits an exempt PTC to be established where the unremunerated trust- business head of the exemption cannot be relied on (for instance, because the company is charging a fee for the provision of its services as trustee/protector).

Fees for establishing and maintaining PTCs

The government's fees for establishing and maintaining a PTC, which have always been regarded as modest, have been increased only slightly so that, in the case of most PTCs, these now amount to GBP1,250 on establishment and annually thereafter; the registered agent's fees (which will usually also be modest) will be additional. The BVI therefore continues to be one of the most competitive and attractive jurisdictions in which to set up a PTC.

Corporate executors

The Trust Corporation (Probate and Administration) Act has been amended to provide that probate can now be granted to a corporate executor if it has a Class 1 trust licence (provided it satisfies the other criteria set out in the Act). This will be the case even if the company does not meet the authorised capital requirements specified in the statute. This change in the law is to be commended since it removes unnecessary impediments on the ability of properly regulated companies to act as executors and brings the provision of executorship services within the framework of the modern fiduciary licensing regime provided for in the BVI's Banks and Trust Companies Act. It will also open up new lines of business for BVI service providers and will provide an additional incentive for shareholders of BVI companies to prepare wills disposing of their shares (which is generally considered prudent if these are not to be held in an effective succession trust).

Originally published in the STEP Journal, November 2013.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Practice Guides
by Mondaq Advice Centres
Relevancy Powered by MondaqAI
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq痴 use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor痴 own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq痴 Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq痴 Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq痴 right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions