Belize Offshore Trust Formation
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Overview of Belize Trust Formation
Belize is an offshore financial centre renowned for its cost-effective solutions such as IBCs and trusts. The former British Overseas Territory has been an independent country since 1981, with the British monarch as head of state. The laws of Belize are based on English common law, therefore allowing Belize trust formation.
Belize trust legislation is largely based on that of Guernsey, with further amendments in favour of the settlor of the trust. The Belize Trusts Act in effect repeals the Statute of Elizabeth and introduces strong asset protection provisions. This approach has significantly increased the attractiveness of Belizean offshore trusts for international clients. Belize trust formation is a perfect cost-effective solution for immediate asset protection.
The main advantage of the Belize asset protection trust is that there is no limitation period for fraudulent conveyance claims against the settlor. This means that the Belizean court would not take into account any claims by creditors for fraudulent conveyance after a property has effectively been transferred into the trust.
Why Set Up a Belize Trust?
As a well-known offshore financial centre, Belize offers attractive and cost-effective solutions. A Belize international trust’s price is quite reasonable for the level of asset protection it provides. The international trusts also enjoy a high level of privacy.
- Robust asset protection provisions
- No fraudulent conveyance period limitations, immediate asset protection
- Trusts have a high level of confidentiality
- Possibility to ignore foreign judgments, including creditor claims, divorce and bankruptcy cases, etc.
- No forced heirship rules are applicable
- No Statute of Elizabeth applicable to the trust
- Purpose trusts are allowed, as well as charitable trusts
- A settlor can be a beneficiary
- Belize trust costs are generally lower than most other offshore jurisdictions
- Letter of wishes status defined in the legislation
- Possibility of opening Belize bank accounts
- The maximum duration of a Belize international trust is 120 years
Process of Belize trust formation
The process of the trust formation in Belize is quite straightforward:
Stage 1
Choosing a trust name and deciding on the structure of the trust
Stage 2
Providing KYC documents, completing forms and drafting and executing the trust deed
Stage 3
Registration of the trust and transfer of assets into the trust
Required Documents To Set Up Belize Trust
To form an offshore trust in Belize the following KYC documents are required:
- Certified copy of proof of ID for the settlor, all beneficiaries, protectors and co-trustees
- Certified proof of address for the settlor, all beneficiaries, protectors and co-trustees
- Reference letter from a banking institution, notary, attorney or auditor
- KYC form provided by your personal manager in Astra Trust
For more information click below to receive certification instructions and requirements.
Taxation Of Offshore Trusts In Belize
| Corporate Income Tax | 0% |
| Withholding tax | 0% |
| Gift tax | 0% |
| Capital gains tax | 0% |
| Inheritance tax | 0% |
| Wealth tax | 0% |
| Exchange Controls | No |
Taxation of Belize Trust
Belize offshore entities are not liable to any tax based on or measured on assets or income from outside Belize. Such entities are considered not to be resident in Belize and are therefore not subject to foreign exchange controls either.
Therefore, any endowments, donations or gifts to the Belize international trust and its trustee are not subject to tax in Belize. There is no taxation in Belize of any income received by the trust, derived from either the active trading or passive holding of the assets. Distributions from the Belize trust are free of tax as no withholding tax is applicable.
Besides, there is no capital gains tax applicable to Belize trust. As a result, there would be no taxation on sale in case the trust property increases its value in time. No wealth tax and no inheritance tax applicable to the trust in Belize. Finally, the currency exchange controls are not effective for the international entities in Belize.
It is possible to establish a remuneration trust in Belize. The remuneration trusts are widely used in tax avoidance schemes for optimization of income payable to the management of the companies.
Belize Trust Legislation
The trust legislation of Belize designed to maximize the asset protection of the trust assets. The laws regulating trusts in Belize include the Trust Act Chapter 202 adopted in 1992, revised in 2020 and the International Trust regulations of 2007.
From the very first version, the Belize trust law introduces immediate asset protection of the trust fund without any fraudulent conveyance period limitations. This very feature is unique for the offshore trusts and allows immediate protection in the moment of lawful conveyance of the assets from the settlor or third party to the trust.
The trust law clarifies the definition of the authorized trustee investment as well as the implied powers of the trustee in separate schedules. It generally contains the standard necessary provisions, including powers and duties of the trustee, indemnification of the trustee, liability for breach of trust and tracing the trust property.
Common Law Rules
The Belize Trust Act repeal the Elizabeth Statute, requirement to the accumulation period and other common law rules.
Perpetuity Period and Accumulation Period
According to the Belize Trust Act, the rule of law known as the rule against perpetuities shall not apply to any trust in Belize. Instead, the maximum duration period of a trust that shall be 120 years from the date of its creation.
A trust shall terminate on the one hundred and twentieth anniversary of the date of its creation unless it is terminated sooner in accordance with the trust deed.
The accumulation period of the trust is the same as the maximum perpetuity period of the trust.
Fraudulent conveyance
The Statute of Elizabeth was repelled by the current trust legislation.
Belize is one of the few countries in the world that entirely excluded the fraudulent transfer rules from its legislation. The Belizean courts therefore would not consider whatever claims from the creditors of the settlor for fraudulent transfer of the property to the trust, as long as the transfer has been made in accordance to the Belize trust laws.
For comparison, in most of the other offshore financial centres the creditor would be able to bring the fraudulent transaction claim to the local court chasing the trust property in at least 2 years after the property was transferred to the trust.
As a result, a Belize offshore trust protecting your assets immediately after its transfer, and is one of the best options for those who is in need of instant protection.
Burden of Proof
There are no special provisions regarding the burden of proof of the fraudulent transfer by a creditor. This is most probably due to the absence of the fraudulent conveyance rules whatsoever.
Foreign Judgments
The Belize legal system generally allows to ignore foreign judgment with regards to the Belize asset protection trusts. Unlike some other jurisdictions, there is no specific legislative provisions to exclude foreign judgment.
Belize is not a party and does not ratify The Hague Convention on Trusts.
Forced Heirship
Belize asset protection trust allows avoidance of the forced heirship rules applicable in the home jurisdiction of the settlor and beneficiaries. There are no forced heirship rules applicable in Belize.
Bankruptcy
The Belize trust or any settlement on it shall not be affected, void or voidable in the event of bankruptcy of the settlor or anyone of the beneficiaries in their home jurisdiction or anywhere in the world.
Spendthrift Beneficiaries
The Belize offshore trust can be established as the Protective or Spendthrift Trust. The terms of the trust may make the interest of a beneficiary subject to restriction on alienation, diminution or termination in case of the beneficiary becoming insolvent or any of his property becoming liable to seizure or sequestration for the benefit of his creditors, according to the Belize offshore legislation.
The Following Laws Are Applicable To The Belize Trust Formation
Structure of Belize trust
Settlor – the settlor of Belize trust can be both, an individual or corporation based outside of Belize. The settlor must have the capacity to own and transfer the property before transfer it to the Belize trust.
According to the Belize Trust Act the settlor may also be a trustee, a beneficiary or a protector of the trust.
The nominee settlors can also be used for the privacy matters.
The settlor of a trust may give to the trustee a letter of his wishes or the trustee may prepare a memorandum of the wishes of the settlor with regard to the exercise of any functions conferred on the trustee by the terms of the trust.
Trustee – the trustee is an individual or corporation that holds trust fund for the benefit of the beneficiaries. The trust law require a Belize trust to have at least one trustee who is a resident of Belize, and a licensed Trust Agent, that is usually one of the Belize trust companies.
The co-trustees may be an individual or corporation of any nationality and residency. The co-trustees does not need to be licensed in Belize or to carry on trust company business.
Starting from 2022, the Private Trust companies permitted in Belize. This type of arrangement grants full control over the trust without requirement to appoint a licensed Belize offshore trust company. The private trust company in Belize shall have paid-up share capital of ten thousand dollars and have its registered office and agent in Belize.
Protector – the Settlor of a Belize trust may appoint the protector. Such appointment is optional, as the trust is valid without the protector’s appointment. Protector’s main function is to supervise the trustee and to ensure that the trustee acts in accordance to the trust deed and that the trust is properly managed. The protector may have very broad powers, including the removal and appointment of the trustee, approval of certain transactions, etc.
The protector of a trust in Belize may also be a settlor, a trustee or a beneficiary of the trust, as well as a third party. Unlike a trustee, a protector does not have a fiduciary duty in front of the beneficiaries of the trust, unless the opposite is specifically outlined in the trust deed.
Beneficiaries – beneficiaries are persons or a class of persons who benefit from the trust. A beneficiary of the Belize trust shall be identifiable by name or ascertainable by reference to a relationship to some person (whether or not living at the time of creation of the trust) or otherwise by reference to a description or to a class.
The trust instrument in Belize may provide for the addition of a person as a beneficiary or the exclusion of a beneficiary from benefit under the trust, or to impose an obligation on a beneficiary as a condition of benefit under the trust.
The Belize asset protection trust may be set up as a purpose trust. To create such a trust the purpose shall be specific, reasonable and capable of fulfilment and shall not be immoral, unlawful or contrary to public policy. In Belize, it is possible to establish both, charitable trusts and non-charitable purpose trusts.
Any purpose trust created as a Belize international trust shall have a protector who acts as the enforcer for the purpose of the trust.
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Privacy of Belize Trust
The Belize international trust formation process has a high level of privacy. Information regarding the settlors and beneficiaries is held solely within the office of the trust agent.
At the time of trust formation, the trust agent is required to submit only a limited amount of information to the Register of Trusts. This information includes the name of the trust, the date of settlement and registration, the name of the trustee and protector, if any, and the name and address of the trust agent. The Belize trust formation process is private and straightforward.
The Belize Register of Trusts is closed to the public. According to Section 65c of the Belize Trusts Act, the register is not open to public inspection except that the trustee or the trust agent of a trust may in writing authorise a person to inspect the entry of that trust in the Register of Trusts.
The Registrar of Trusts shall not disclose any information contained in the register to any person without the written authorisation of the trustee or trust agent, except on the written request of the Director of Public Prosecutions, the Director, Financial Intelligence Unit, the Commissioner of Police or other regulatory or enforcement authorities, certifying that such information is reasonably required to facilitate a criminal investigation, prosecution or proceeding, whether in Belize or elsewhere.
Practically, this means that the Belize asset protection trust grants the highest level of privacy possible, with essential information and the trust deed itself available only to the trust agent, apart from the settlor. Given the cost of a Belize trust, the robust privacy and strong asset protection, these trusts can be one of the most effective offshore solutions.
If you are interested in the Belize trust formation or you want to know how much Belize trust costs, do not hesitate to contact us.
The team of Astra Trust has the necessary experience and is able to assist you in any matters regarding the trust establishment.
FAQs in Relation to Belize Trust Formation
How do I set up a trust in Belize?
To begin, contact Astra Trust. Following this, we will help to draft your trust deed with the assistance of trust practitioners. After the trust deed is ready, the trust can be registered with the authorities. The process is straightforward but requires precision.
How much does it cost to set up a trust in Belize?
The initial setup costs can vary based on the complexity of the trust and the services you require.
What are the benefits of a trust in Belize?
Trusts in Belize offer robust asset protection and privacy. They also provide flexibility for estate planning and tax strategies. Belizean trust advantage in contrast to other jurisdictions is immediate asset protection, without transitionary period which is in most cases 2 years and more.
What is the role of the trustee in a Belize trust?
The trustee is responsible for managing the assets in the trust and acting in the best interests of the beneficiaries. They must follow the terms of the trust deed and act prudently.
Are there any reporting requirements for a Belize trust?
Belize trusts are subject to minimal reporting requirements, providing confidentiality and privacy for the settlor and beneficiaries.
Can a Belize trust be revoked or amended?
In most cases, a Belize trust cannot be easily revoked or amended once it has been established. However, the trust deed may contain provisions for modification and termination under certain circumstances.
