Mauritius: An Innovative Trust And Estate Planning Jurisdiction


By their very nature, all trusts are there to protect assets. In practice, however, the degree of protection will invariably depend upon the overriding trust law in the jurisdiction chosen, the physical location of the assets held and the rigour with which any Court may pursue those assets in the event that it decides so to do.

There is also the question of the costs of establishing a structure to consider. If the expense incurred is disproportionate to the value of the assets intended to be held, the whole scheme become unattractive. Professional providers need to understand these issues and be able to tailor arrangements to fit each scenario.


As in most offshore trust jurisdictions, our Trust Act 2001 applies a two year rule. That is, that no action shall lie against the trustee of a trust after more than two years from the date of the transfer of the assets to the trust. However, a court may declare a trust void, where it is established that the trust was made with the intent to defraud persons who were creditors of the settlor at the time when the trust property was vested in the trustee. As a practical measure therefore, it is common for the intended settlor to confirm in writing that in gifting assets to the trust, he remains solvent thereafter.

Notwithstanding any rule or law relating to enforcement of judgments given by the court of another jurisdiction, where the law of Mauritius is the proper law of the trust, the court shall not vary it or set it aside. Additionally, it will not recognize the validity of any claim against the trust property pursuant to the law of another jurisdiction or the order of a court of another jurisdiction in respect of personal or proprietary consequences of marriage or dissolution of marriage, succession rights or the claims of creditors in insolvency.


The doctrine of "sham" as it relates to the operation of a trust would take many pages to explain in full. In essence though, for a trust to maintain its integrity in the face of a creditor claim, and for a court uphold the sanctity of the trust, it must be clear that the settlor did not establish the trust with every intention of carrying on as if the assets were still his own. Notwithstanding this requirement, there are perfectly satisfactory checks and balances, and "comfort" mechanisms that a settlor can retain after having donated his assets to the trustee.


It is not uncommon for a high net worth person to transfer the house, the car and other assets into the name of his or her spouse. Whilst this may provide a modicum of safety, if the said assets remain in the jurisdiction of residence, it cannot be said that they are truly beyond the reach of creditors. In addition, and quoting the old trust maxim of "donner et retinir ne vaut" (you can't retain that which you have given), a subsequent breakdown in the marriage may lead to undesired consequences!


The Settlor will donate assets either directly into the trust or via an underlying company. Equally, the shares in an existing investment or property company may be donated to the trust. Subject to the caveats referred to above, this will mean that he or she no longer owns the assets and, as the trust will invariably be a discretionary trust, he or she cannot simply demand repayment of the trust fund even if a court is making an order to that effect.

In theory of course, if the assets concerned are physically or otherwise within the reach of the court, the protection may be purely academic. Similarly, (as happened in a well known US case) the judge ordered the defendants to stay in prison until they extracted the required funds from the trustees, even though they had previously been removed as beneficiaries of the trust. Trustees have undoubtedly been faced with the problem in the past namely, "Will our making a distribution to a beneficiary by way of paying off his creditors and thereby getting him out of jail, be properly using our discretion to act in the best interest of the beneficiaries?"

Having said all that, the basic trust solution may be quite suitable for most individuals.


It has become a regular feature of recent offshore planning to make use of the so-called insurance wrap. Let us say that A is a partner in an accounting firm through which he has unlimited personal liability. A establishes a trust in Mauritius. He settles assets (which all being well, he is unlikely to need in his lifetime) on the trust. These assets can be of a wide range of asset class. In the example, let us assume that it is an investment portfolio. The trustees negotiate an insurance policy on A's life with say, a Bermuda based insurance carrier. The majority of the premium, which is a one-off single premium, is the investment portfolio itself. The insurance carrier is content to leave the investment management where it was before and indeed, A will continue to be in contact with his former investment adviser just to hear how things are doing. Of course, from that point onwards, the asset is owned by the insurance company and not by the Trustees and certainly not by A.

Because the assets are owned by a Bermuda based insurance company and are invested in instruments which may incur the least level of withholding taxes, the investment should grow faster than had it remained onshore.

When A dies, the beneficiary of the policy is the trust. The beneficiaries of the trust could of course be anyone agreed between the Settlor and the Trustees or as may be changed at a later date.

It sometimes happens that the insured may have an urgent need for funds due to an unexpected event. The insurance company will usually lend money at a market rate of interest and obtain repayment either before or upon maturity of the policy.


The type of an arrangements set out in the above two examples contemplate the fact that the Trustees will be a licensed trust company such as MITCO in a jurisdiction such as Mauritius. Provided the assets concerned are of sufficient value, the cost of maintaining a trust in this way is usually low as compared with the benefit it provides.

However, for more sophisticated individuals, and possibly those who would feel more comfortable retaining a degree of control over the trust assets (of whatever type), a Private Trust Company may be appropriate.

A Private Trust Company (PTC) is a company formed to act as trustee to a limited number of trusts, either for the benefit of a single family, or for the benefit of different branches of a family or for distinct (but related) family groups. The administration of the PTC is outsourced to licensed service providers. It is the Directors of the PTC that carry out their duties on behalf of the company which will be the trustee of the trust/s. The Board of Directors may be drawn from the Settlor's own family, his close advisers or others. We will normally recommend that at least one Director is provided by the chosen licensed Trust company in order that he may fulfil his duties under the law but also provide practical and technical advice to the Board.

A trust company owned by the "family" can afford to be more flexible in its decision taking compared to a third party trustee which might need to seek indemnities from all beneficiaries before major decisions. The involvement of the settlor or a close family member or close personal advisors on the board of the trust company will allow the actions of the trustee to be closely monitored by the family.

There is no public register of Directors or Shareholders of the PTC. The confidentiality of information provided to the Financial Services Commission for the purposes of licensing is specifically protected by law. There is no registration of the individual underlying trusts.

The family owned PTC will be more comfortable for underlying trusts to hold higher risk assets such as trading companies than a third party trustee would be.

The Financial Services Commission is very clear that the responsibility for ensuring compliance with the terms of the licence rests with the appointed Licensed Management Company. The PTC has to provide a list to the FSC annually of the trusts for which it acts.


Fuelled by the wealth boom, cross border investments and population growth in Africa, Middle East, India and China, the number of high net worth and ultra HNW families has skyrocketed. Built on traditional and cultural values, most businesses in those regions tend to be family run. The number is growing fast at an estimated 8% per annum. One can see the importance of family businesses to the stability and growth of those economies.

This offers an opportunity to Mauritius to attract the family wealth management business as it already has a well established reputation as a high-end tourism destination, a successful Integrated Resort Scheme (IRS), political stability, a pool of qualified professionals and last but not least, cost efficiency.

Families setting up a private office outside of their "home" jurisdiction will generally focus on certain key issues which can be distilled into:

  • do I want to live there? and,
  • does it make sense – from a fiscal, operational and geographical perspective?

The location of a family office is not necessarily where the family members are resident.

There are a number of classic location options available including New York, London, Monaco, Geneva and Hong Kong. The new international financial centres of the Middle East are now gearing up by introducing Family Office legislations to fill the geographical void between Geneva and Hong Kong.

This is where Mauritius can step in and in looking to decide where to set up the private office, families in India, China and Middle East will inevitably look at the 'peace of mind' factor which they can achieve in Mauritius. Mauritius is just four hours behind Hong Kong and the same number of hours ahead of GMT. Accordingly for a family based largely in Africa, Asia or the Middle East, we are very much at the centre of their world.

Professional Trustees like MITCO in Mauritius have all the expertise needed to provide a complete range of trust, tax and wealth management services to high net worth families. In one central office, dedicated to serving the family, all the financial affairs can be managed and all the "concierge type" travel, hotel and other arrangements taken care of. Mauritian Trust companies have built up considerable expertise in advising clients on global trust and estate planning, business succession and administration of trust (including PTCs) and Family Office.

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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