BELIZE OFFSHORE TRUSTS FORMATION AND ASSET PROTECTION IN BELIZE
The Belize Trust Act, Chapter 202, of the Laws of Belize forms the centerpiece of Belize's attraction as the domicile of choice for the formation and administration of asset protection trust. It is at times regarded as the most modern pieces of trust legislation worldwide. The Belize Offshore Trust enjoys a great deal of confidentiality since there are no legal requirements for the trust instrument to be registered.
The cornerstone of the Belize Trust Act is found at section 7(6) of the act which states as follows:
"Where a trust is created under the law of Belize, the Court shall not vary it or set aside or 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 to -
- The personal and proprietary consequence of marriage or the termination of marriage;
- Succession rights (whether testate or intestate) including the fixed shares of spouse or relatives;
- The claims of creditors in an insolvency.
Belize Trusts have no gestation period as found in Trusts laws in other jurisdictions. A trust becomes valid and effective from date of incorporation provided that it is not subject to any instance of duress, fraud or mistake. Case law has shown that established Trusts in Belize have been able to withstand claims of creditors, spouses and foreign tax agencies/governments.
Another plausible factor of the Belize Trust Act is that it provides for the office of "Protector" who may oversee the trust and provide instructions to the Trustee. The Settlor may also appoint anyone of his choosing to act in this capacity to supervise and monitor the trustee and duration of the Trust.
To understand how the Act operates, it is necessary first to understand that the law of fraudulent conveyances was not and is not now a part of English Common Law as it was received in Belize. The law of fraudulent conveyances is entirely a creature of statute. At Common Law a transfer of property could not be set aside on the grounds that it was effected to defeat the claims of creditors. It took an Act of Parliament, acting under the persuasion of powerful banking interests, to create this remedy. The Statute of Elizabeth, as it is now called, created the first fraudulent conveyance law in 1571.
To exclude the operations of the law of fraudulent conveyances, therefore, it is not necessary to amend or exclude any part of the common law, it is necessary to exclude only the operations of this particular statute. In Belize, the relevant provisions of the Statute of Elizabeth were re-enacted into Belize Law by Section 149 of the Law of Property Act.
The Belize Trust Act expressly excludes trusts created under that Act from the operations of this Section. Subsections (6) and (7) of Section 7 the Asset Protection Trust Act provide as provided above.
In Belize rather than applying a statutory limitation period to the Statute of Elizabeth provisions, it excludes these provisions altogether. In this context the question of whether the Settlor intended to defeat the claims of the creditor is irrelevant. In the absence of actual fraud, i.e. deceit, in the establishment of the asset protection trust, the assets of a Belize trust cannot be attached to satisfy the judgment of a foreign court based on any foreign law. This is so even if the transfer is done with the specific intention of defeating the claims of creditors, and whether the claim and/or the judgment arose before or after the trust was created.