The administration of trusts is an essential service for any well developed financial services industry and the Turks & Caicos Islands (TCI) is no expectation. While trusts themselves are dealt with in The Trusts Ordinance 1990, trustees in the Turks & Caicos Islands (TCI) are required to be licensed as per The Trustees (Licensing) Ordinance 1992 and The Trustees (Licensing) Regulation 1992.
The main Ordinance defines a professional trustee as a trustee who is entitled to receive remuneration for his services as trustee, whether authorised by the terms of the trust or by the consent in writing of all the beneficiaries of the trust or by any court order.
The Ordinance goes on to define the general requirements for licensing professional trustees, the power and duties of the superintendent of trustees and miscellaneous provisions regarding liability, confidentiality and the non-application of the Recording of Deeds Ordinance.
The Trustees (Licensing) Regulations define the categories of licence, the details required of an application for a trustee licence and the reporting requirements.
There are two categories of licence.
The first is a restricted licence, which is subject to the condition that the license shall act as professional trustee only on behalf of a named settlor or settlors.
The second is an unrestricted licence, which has no such condition imposed. Licensed trustees are required to make returns, appoint auditors, report detrimental conduct and effect insurance against negligence, dishonesty and breach of duty. The Regulations include form TL2 which sets out in detail the actual application requirements and the fees applicable. These are US$500 on application for an unrestricted licence, US$200 for a restricted licence. In addition there me annual fees of US$3,000 for an unrestricted licence and US$750 for a restricted one. An important requirement in the licensing process is the submission of a business plan together with a full financial disclosure and references on the principals and management of the proposed licensee. The minimum capital requirement for an unrestricted license is US£250,000.
In addition to the above TCI has issues The Trustees (Licensing) (Exemption) Order 1992 that defines certain companies which are exempted from licensing. These are either: a company which is the trustee of a single trust only and the issued share capital of which is entirely beneficially owned by one or more of the beneficiaries or by the settlor or by a combination of settlor and beneficiaries or: a company which is the trustee of a single trust and has its registered office in an approved jurisdiction.
A further exemption covers a company which acts a bare trustee only, defined as holding property on trust with no interest in or duty as to the trust property except to convey it when directed by the beneficial owner.
The TCI regulatory office, the Financial Services Commission, is often asked about bank licences by individuals or groups of individuals, who are desirous of providing financial services.
In TC1, as well as in other British Dependent Territories, the granting of bank licences is in the main restricted to existing banks which are already regulated in their home jurisdiction. However, the trust company route rather that the establishment of a bank can often provide a viable tax efficient alternative for those professionals and companies wishing to set up financial services along the lines described above and should be given serious consideration. There are currently 21 licensed trustees in the Turks & Caicos Islands, of which 16 are unrestricted licences.
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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12 May 1998