Saint Kitts: Law of Offshore
The Saint Kitts and Nevis Trusts Act 1996 was a replacement for the 1961 Trustee Ordinance modeled after the 1925 English Trusts Act, and contains modern asset protection provisions. Trusts and their beneficiaries receive the same tax waivers as companies, with the similar proviso that all transactions must be confined to non-residents for the trust to enjoy exempt status. Trusts may have a protector but, with the exception of unit, spendthrift and charitable trusts, the protector needs acceptable professional qualifications. Both the settlor and trustees can be beneficiaries of a trust.
Saint Kitts and Nevis trusts are exempt from income, withholding, capital gains and stamp taxes as long as all transactions are confined to non-residents, and subject to a statutory declaration of exempt status accompanied by an annual registration fee of USD200.
Section XV of the Act makes it clear that beneficiaries do not lose their exemption if trustees are active in the Federation owning or leasing property for an office or residences for beneficiaries, holding meetings, conducting banking, signing employment contracts, and arranging for goods and services.
Every trust must maintain an office in the Federation for service of papers. At least two trustees must be appointed, unless one trustee is a corporation or only one trustee was originally appointed under previous legislation. One trustee must either be a Federation resident or carry on business from an office within the Federation. Trustees' duties include registering the trust with the Registrar of Trusts (who may also be the Registrar of Companies).
Trusts do not have to be audited, unless trust terms call for this. The annual statement filed by trustees need not include any financial information. Strict confidentiality rules for trustees prevail. In response to a written request, trustees may in a "reasonable time" provide information about the trust's financial situation and management to the Eastern Caribbean Supreme Court, Government inspectors, and, subject to the terms of the trust, the settlor, protector, a beneficiary, and a charitable beneficiary.
Every non-charitable trust is restricted to a 100-year life span. No restriction is imposed on charitable trusts. Trust terms should specify how long the trust might accumulate income.
Asset protection provisions, covered in Part V of the Act dealing with a settlor's rights and responsibilities and applicable to all trust, shield the settlor against forced heirship, compulsory division of matrimonial property, and creditors' suits. A creditor who wants to bring a court action against trust property must first purchase a 25,000 East Caribbean dollars ($9,250) bond from a Federation financial institution and deposit it with the Minister of Finance to cover all costs should the action prove unsuccessful.
The proper law of the trust is the law of the jurisdiction expressed by the trust's terms as the proper law; or, failing that, implied from the trust's terms; or failing either, the jurisdiction with which the trust at the time it was created had the closest connection.
The Federation's 1997 Financial Services (Regulations) Order set the following fees for applicants wishing to engage in the trust business:
- on filing of first application (not refundable) - for all applications, USD200;
- on granting or renewal of authorisation for an unrestricted business, USD2,000;
- and for a restricted business, USD1,000.
Nevis offshore trusts are formed under the Nevis International Exempt Trust Ordinance of 1994, as amended to September 2000. The Trust Ordinance includes special provisions to enhance the use of Nevis as a preferred jurisdiction for the establishment of Asset Protection Trusts.
Highlights of the Trust Ordinance include:
- Exemption from all forms of Nevis taxation and exchange controls provided that transactions take place only with non-residents;
- The trustee may be either a trust company licensed to do business in Nevis or a company incorporated under the Corporation Ordinance;
- The proper law may be the law of Nevis or the law of another jurisdiction;
- The rule against perpetuities does not apply;
- Forced heirship rules are specifically excluded;
- Spendthrift and charitable trusts are permitted;
- There is a USD25,000 bond requirement prior to the commencement of an action or proceeding against trust property;
- There is no registration requirement other than for the Trust's name, name of Trustee and the registered office address;
- Settlor and Beneficiary must be non-residents and may be the same person;
- One trustee must be a Nevis offshore company or a trust licensed company;
- Protectors are allowed for and may be the same person as the Settlor and Beneficiary of the Trust;
- An IET is valid and enforceable notwithstanding that it may be invalid according to the law of the Settlor's domicile or residence or place of current incorporation;
- The Trust is not considered fraudulent if settled up to 2 years after the date of the creditor's cause of action;
- The creditor must prove the intent of the debtor to defraud with "clear and convincing" evidence;
- The Statute of Queen Elizabeth is excluded.
The Nevis registrar maintains a register of international trusts and a register of qualified foreign trusts. Where a trust provides for the law of Nevis to be the governing law of all or any aspects of that trust an application for entry on the register as an international trust shall be made to the registrar within 45 days of the date on which the trust is created, settled or established. Where a trust provides for the law of a jurisdiction other than the Island of Nevis to be the governing law of all aspects of that trust an application for entry on the register as a qualified foreign trust shall be made to the registrar within 45 days of the date on which the trust is created, settled or established.
An application for registration should be accompanied by notice of the name and registered office of the trust, a certificate from a trustee company, a barrister or solicitor certifying that the trust upon registration will be an international trust or a qualified foreign trust, the date on which the trust was created, settled or established, and in the case of a qualified foreign trust, the law under which the trust was settled. Registration has to be renewed annually.
The register is not open for inspection except that a trustee of a trust may in writing authorise a person to inspect the entry of that trust on the register.
A trust registered under the Nevis Ordinance is exempt from all income tax, all estate, inheritance, succession and gift tax payable with respect to the trust property by reason of any death, stamp duty with respect to all instruments relating to the trust property or to transactions carried out by the trustee on behalf of the trust, and all exchange controls.