As a common law British Dependent Territory in which the concept of the trust has long been accepted, TCI offers a highly favourable situs for trusts. The freedom afforded by the absence of tax treaties and exchange controls and the privacy ensured by the non-registration of t documents are tempered by a strict I regime under which the activities who hold themselves out as professional trustees are regulated. (see "Banking and Trusteeship")

In this context, TCI presents itself as an attractive jurisdiction catering to the diverse needs and objectives of settlors (grantors), whilst at all times concerning itself with the interests of beneficiaries and legitimate creditors.


The Trusts Ordinance 1990 was enacted in TCI to cater to modern demands and includes features from other jurisdictions and some original provisions resulting from recommendations made by respected English counsel. The Ordinance is not an exhaustive code and the English principles and applicable case law continue to apply in so far as they are not overridden by the statutory provisions.

Some of the main features of TCI trusts are as follows:

SEVERABLE ASPECTS: The validity of the trust, the interpretation of its terms and the administration of the trust property are each regarded as severable aspects. It is possible to specify that the laws of different jurisdictions apply to the aspects of interpretation and administration.

EXCLUSION OF FOREIGN LAW: The Ordinance contains provisions excluding the applicability of foreign law to the creation of a TCI trust and to dispositions made under it.

THE RULE AGAINST PERPETUITIES: This does not apply to a TCI trust; the trust instrument specifies the duration of the trust.

ASSET PROTECTION TRUSTS: TCI's law contains specific provisions facilitating the establishment of trusts designed to protect assets from expropriation and claims by persons whom the settlor wishes to exclude from his or her estate whilst recognising the rights of bona fide creditors.

Trustee to act fairly between beneficiaries, not necessarily even handedly. The trustee can be given wide discretion in relation to the various interests of beneficiaries and wide powers of accumulation and advancement.


There are several different sets of circumstances under which persons might wish to dispose of their property during their lifetime. As an example, in countries where taxes are levied on a person's estate upon their death, it is prudent to mitigate the incidence of taxation by reducing the size of the estate before death. Similarly, where the property is income producing, disposing of the property may reduce the settlor's income tax liability.

By creating a trust and appointing a trustee not resident in his or her own jurisdiction, several additional advantages can accrue to the settlor and the beneficiaries of the trust. Where TCI is the situs of the trust, it may be possible to avoid tax on capital gains in the settlor's domicile in addition to any income tax which would otherwise be payable.

Where settlors reside in a country which does not recognise the trust concept and has laws which can override their will, they may, by the use of a TCI trust, be able to prevent their property passing to members of their family whom they wish to exclude.

Fiscal considerations aside, it may be that individuals, for any number of other good reasons, merely wish to keep their affairs private and this is effectively achieved by creating a TCI trust.

The information provided was correct in July 1996.

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.