Law of Bermuda - Trust Law

Trust Law

See also Trust law

• It is illegal to act as a trustee, as a business, without a licence. Generally, licences are only granted to corporations, so almost all professional trustees are trust companies. A professional person may act as a trustee if (and only if) he or she has a connection with a licensed trust company, and delegates certain functions to that trust company.
• Unpaid private trustees are fairly common, although usually only for domestic trusts (see below).
• The residence of a trust follows the residence of its trustees. A trust is therefore only Bermuda resident if a majority of its trustees are Bermuda resident.
• Generally, Bermuda tax law is generous in its treatment of non-Bermuda assets, which include foreign currencies even where held at Bermuda banks. There is usually no tax charge in Bermuda (for example, to Stamp Duty) on settling non-Bermuda assets into trusts, nor on the income those assets produce, nor on their sale, nor on their distribution to beneficiaries. Like the other offshore financial centers ("tax havens") this has led to the use of Bermuda trusts by settlors and beneficiaries from higher-tax jurisdictions.
• By contrast, Bermuda assets are generally charged to ad valorem Stamp Duty upon being settled into trust.
• Bermuda (by statute) recognises the concept of non-charitable purpose trusts.
• Domestic trusts (that is, trusts settled by Bermudians, with Bermudian beneficiaries) are very common, due to the stamp duty legislation, which imposes a tax of up to 15% of the value of Bermuda-assets in an estate on death, but does not tax an interest in a discretionary trust.