Most Read Contributor in British Virgin Islands, February 2017
Under most jurisdictions, unless a trust is established for
charitable purposes, the assets require to be held for a specific
beneficiary or class of beneficiaries. However, it is possible in
the BVI to establish a trust for non-charitable purposes. Such
trusts are commonly referred to as 'purpose trusts'.
In order for a non-charitable purpose trust to be valid, the
following conditions must be satisfied:
the purpose(s) must be specific,
reasonable and possible
the purpose(s) cannot be immoral,
unlawful or contrary to public policy
at least one trustee must be a
the trust instrument must appoint an
'Enforcer' who cannot also be a trustee
At least one of the trustees must be a 'Designated
Person'. Broadly, a designated person is a
barrister/solicitor/account practicing in the BVI, a licensee (ie a
BVI trust company) or a BVI Private Trust Company
(PTC). Click here for more information on
The designated person must keep a documentary record of the
following in the BVI:
the terms of the trust
the identity of the Enforcer and any
all settlements of property on the
trust and the identity of the settlor
the trust accounts
all distributions or applications of
The Enforcer has both the duty and the power to enforce that the
trustees administer the trust properly in furtherance of the
purposes set out in the trust deed.
The Enforcer can be an individual or corporate entity and there
is no requirement that the Enforcer be located in the BVI. The
Enforcer cannot, however, also be a trustee.
The Enforcer is entitled to see the following documents:
the trust accounts
the trust deeds
legal and professional advice
received by the trustees
Purpose trusts are exempt from the rules against perpetuities
and so can endure indefinitely (provided the purposes remain valid
as set out above). However, the trust deed may specify a date or
event on which the trust will cease, and set out how the trust
assets will be disposed of on that date or event.
Purpose trusts are frequently used:
to further purposes, which, although
generally accepted as philanthropic are not charitable in strict
terms (for example, promoting a political agenda)
in commercial transactions, for
example to isolate assets from a larger transaction, or as a
special purpose vehicle for conducting an off balance sheet
to hold shares in a PTC. This avoids
the need to obtain a grant of probate from the BVI court (which can
be time consuming and is a public court process) which would be
necessary on the death of a shareholder. Purpose trusts are often
drafted to meet the criteria to fall within the VISTA regime. Click
here for more information on
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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Confidentiality of corporate documents and information is one of
the key attractions of incorporating a company in the BVI. A
company search of the BVI Registrar of Corporate Affairs will only
disclose certain information and documents.
A trust is a legal relationship created when a person (the settlor) places assets under the control of another person (the trustee) for the benefit of specified persons (the beneficiaries) or for specified purposes.
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