INTERNATIONAL EXEMPT TRUST

The enactment by Commonwealth of Dominica of modern trust legislation, the International Exempt Trust Act, No. 10 of 1997, has made it a location-of-choice for international trust operations.

Why Establish Trust Operations in the Commonwealth of Dominica?

By utilizing a trust in this jurisdiction combined with an underlying company formed under the Dominica’s IBC legislation protection of the trust's interests and assets and facilitation of its management and operations are secured.

They include:

  • Protection of wealth benefits as the proper law of the trust is that of the Commonwealth of Dominica
  • Protection of inheritance wishes through anti-forced heirship provisions
  • Protection of trust interests through legal acknowledgment of the position and powers of the Trust Protector
  • Protection of privacy: the register shall not be open for inspection except when a trustee of a trust in writing so authorises
  • Facilitation of comprehensive investment strategies through provision for broad investment powers for trustees, i.e. investment in most international banking institutions and stock exchanges
  • Facilitation of a wide range of estate planning options through the non- applicability of the Rule against Perpetuity. The duration of an international trust is 100 years.
  • Facilitation of the formation of charitable and non-charitable trusts through recognition of purpose trusts
  • exemption from all income taxes, ad valorem stamp duties and all exchange control taxes.
  • In addition to the specific advantages outlined above, companies can also derive a number of more generalized benefits from the Dominica International Exempt Trust legislation relating to the protection of assets, preservation of wealth, commitment to privacy and anonymity, zero taxability, and ease and flexibility of operations.

Trusts may be created for various reasons including the minimisation or deferral of tax liability, the simplification of legal formalities relating to asset distribution on death, the protection of assets, the protection of confidentiality on transfer of assets, and the severance of legal ownership from assets whilst retaining the benefits. Trusts created in the Commonwealth of Dominica can take advantage of the territory's innovative legislation.

Main Legislative Provisions

The main features of the 1997 legislation are:

Perpetuity: the rules against perpetuities do not apply. The provisions include:

  • an optional statutory perpetuity period of 100 years for suspension of the vesting of interests
  • replacement of the common law rule holding a trust "void ab initio" if it is possible that an interest might vest outside the perpetuity period

Jurisdiction of the Court: provision for the High Court of Dominica to have jurisdiction in cases where the trust's only real connection with the Dominica is its proper law, the trustee is resident in Dominica or any part of the administration is carried on in Dominica.

Inheritance: provision for a settler of a trust to pass good title to trust assets notwithstanding the laws of his domicile relating to inheritance or succession once the settler is of full age and sound mind. An international trust or disposition avoids or defeats rights, claims or interests conferred by the law of a foreign jurisdiction upon any person notwithstanding the contravention any rule, law, judicial or administrative order or action intended to recognise, protect, enforce or give effect to any such right claim or interest.

Purpose Trusts: provision for the establishment of non-charitable trusts which neither require identifiable beneficiaries nor are subject to the rules against perpetuities and remoteness of investing.

Protectors: establishment of a statutory basis for the appointment of protectors of trust who may be the settlor, trustee or beneficiary of the trust established.

Privacy: although registration of the trust is required the register in relation to the trust shall not be opened without the written permission of the trustee, and exemption of trustees from requirements for the filing of annual returns or trust accounts, the audit accounts and reporting requirements relating to the trust.

Income Tax and Ad Valorem Stamp Duty Exemption: exemption from all taxation in the Commonwealth of Dominica.

Corporate and Trust Services (Caribbean) Limited will advise on the most beneficial structure and thereafter either incorporate the offshore company or set-up the trust, and arrange for the management and administration of its activities, including credit cards, banking arrangements, and general office services. Our full services are listed below.

  • establishment of Asset Protection Trusts
  • trust establishment and preparation of clients’ trust deed
  • trust administration and provision of corporate trustees
  • trust accounting and portfolio valuation services as required
  • safe custody of trust documentation and records
  • provision of protector to trust as required
  • provision of charity trustees
  • provision of successor or alternate trustees

At all times Corporate and Trust Services(Caribbean) Limited will work closely with the professional advisors selected by the client. For complicated tax minimisation and asset protection trust structures we recommend that specialised independent advice is obtained by the clients before proceeding to establish the trust structure.

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