Most Read Contributor in British Virgin Islands, January 2017
Harneys Fiduciary has a long standing history of advising High
Net Worth Individuals (HNWIs) on how to hold their wealth. The type
of structure will, to a large extent, depend on the nature of the
assets and the client's objectives but typical considerations
are asset protection, succession, confidentiality and tax
The rise in the number of global HNWIs has seen an increase in
demand for lifestyle assets such as yachts, art work, prime real
estate and private jets.
Structures range from simple probate avoidance trusts to more
bespoke multi-generational family governance structures which
combine trading businesses with commercial and private investments
in various asset classes. These structures will usually contain
holding companies, trusts and private trust companies
Yachts and BVI Companies
Typical structures involve the use of a BVI Business company as
the immediate owner of the yacht and may also contain trusts (in
many different forms). Factors that impinge upon the advice include
whether the yacht will be used personally or whether it is to
operate commercially as a business.
Using a company to hold the yacht provides the ultimate
beneficial owner (UBO) with increased
certainty and mitigates the risk inherent with owning and operating
a vessel personally.
While Harneys establishes and administers stand-alone yacht
holding structures, there is often the need to consider wider
wealth planning objectives. It is also worth noting that yachts as
an asset class have a commonality with other lifestyle assets and
while they cannot be used interchangeably, the same benefits
translate to other assets.
The characteristics that have made the BVI the pre-eminent
incorporation jurisdiction are also to be found within the BVI
trust legislation. As HNWIs look towards consolidating their assets
and planning for the future, the combination of a BVI company as a
holding platform together with the asset protection and succession
advantages of a BVI trust provides a powerful structuring
proposition for international HNWIs and their families.
BVI trust legislation provides a full array of structuring tools
for international HNWIs. VISTA trusts, purpose trusts (charitable
and non-charitable) and PTCs may all be used in order to create
bespoke trust structures which provide for wealth preservation.
Succession planning and anti-forced heirship
Holding the yacht or other significant assets in a trust
structure has considerable benefits in relation to succession
planning. Should the yacht be held directly by a company,
consideration needs to be given as to who will hold the shares in
the BVI Company. If the shares are held by the UBO, then on death,
probate will be needed in the BVI. This can be time consuming,
expensive, and it is not a private process. Should the company be
held by a trust, then the assets fall outside of the UBO's
estate, and avoid the need for probate.
In common law jurisdictions, freedom of testamentary disposition
has long been taken for granted. This may be contrasted with civil
law or Sharia law regimes under which a proportion of the
deceased's estate must pass to certain beneficiaries or classes
of beneficiaries. BVI trust legislation contains robust anti-forced
heirship provisions which provide that heirship rights conferred by
foreign law are not recognised with respect to the ownership of
trust property. A properly constituted and valid BVI trust will
defeat forced heirship claims and allows a UBO to determine how his
or her assets should devolve on death.
Wider trust planning
Outside of lifestyle assets, BVI trusts and corporate structures
are used for wide ranging purposes. As wealth grows and families
become more mobile, the demand for bespoke structuring rises.
Control and family participation are often key drivers when
establishing new vehicles to hold family wealth and administer
PTCs have proved extremely popular with HNWIs as they allow for
control and multi-generation succession. They are often used to
facilitate family business succession and can also provide a
bespoke platform for private wealth holding and charitable
The BVI's sophisticated company and trust legislation
provides an ideal framework for HNWIs who are seeking to protect
their assets and ensure that they pass efficiently to the next
generation in accordance with their wishes.
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.
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The line between rectification and improvement is a significant one in terms of trust documents. The Jersey Royal Court's judgment In The Matter of the H and J Trusts further clarifies the distinction.
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