The British Virgin Islands (BVI) has enacted innovative new trust legislation which includes provisions conferring on the BVI court an additional power to vary BVI trusts. The legislation, which is unique but which was inspired by section 47 of Bermuda's Trustee Act 1975, on which it builds, only applies to (a) those trusts that were created after the legislation took effect but only in circumstances in which the trust instruments of which have expressly "opted in" to the new statutory provision and (b) those trusts, whenever created, that were previously governed by laws of another jurisdiction but only when an election has been made to "opt in" to the relevant provisions of the statute on changing the governing law of the trust to BVI law. Significantly the legislation potentially enables the dispositive provisions of a trust to be varied without the consent of its beneficiaries, but important and necessary safeguards have been included in the new statutory provisions so that an application will only succeed if it is considered by the court to be "expedient in the circumstances then existing" to vary the trust in the manner contemplated and the statute sets out in it the factors to which the court must have regard when making the relevant determination. The new statutory provision makes the establishment of BVI trusts and changing the governing law of a trust to the BVI attractive in circumstances in which beneficiaries are, say for tax reasons, unable themselves to consent to the relevant changes. It also permits variations in circumstances in which beneficiaries with remote interests might otherwise block certain variations which would plainly be in the interests of those who would be regarded as the trust's principal beneficiaries.
Read the full article by Christopher McKenzie, published in Trusts & Trustees (Oxford University Press), here...
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