Turks and Caicos: Law of Offshore
The Trust Ordinance (1990) sets out the law relating to trusts. The Ordinance is not exhaustive and English principles of law apply unless overridden by the specific statutory provisions. The Ordinance was drafted with a view to making the Turks and Caicos Island a more attractive jurisdiction in which to settle a trust and to this end contains features from other jurisdictions and recommendations from eminent English counsel.
The Ordinance has been approved for the purposes of the Hague Convention.
Key characteristics of the trusts regime in the Turks and Caicos Islands are as follows:
- There is no requirement to register the trust deed or the beneficiaries;
- There is no rule against perpetuities;
- The trust deed may specify one proper law for interpretation of the terms of the trust deed and another to apply to the administration of the trust assets;
- Foreign judgements are excluded;
- The Voidable Dispositions Ordinance 1998 sharply circumscribes the circumstances in which a "disposition" can be set aside by a creditor;
- Trustees have wide investment powers;
- Re-domiciliation of a trust is permitted.
Exclusion of foreign law: in the absence of a term to the contrary Turks and Caicos Island law provides that the laws of any other jurisdiction with which the trust or any disposition made thereunder may otherwise be connected is to be excluded. The courts of the Turks and Caicos Islands consider they have jurisdiction over a trust in any one of the following circumstances: where the trustees reside on the Islands, where the trust property is situated on the Islands, where the trusts are administered from the Islands, and where the trust was set up under Turks and Caicos Islands law.
Limitation Periods for the setting aside of a "Disposition" : a "disposition is the transfer of assets into a trust by a settlor. Creditors who have a claim against a settlor may wish to set aside the "disposition" and use the proceeds realised to satisfy their claim. The provisions of the Voidable Dispositions Ordinance 1998 sharply circumscribes the circumstances in which a "disposition" can be set aside by a creditor and so make the Turks and Caicos Islands that much more attractive a jurisdiction into which to settle a trust.
Generally speaking the Ordinance only applies to "dispositions" made after the Ordinance became law. "Dispositions" can be set aside by the Supreme Court on the application of a creditor in any of the following sets of circumstances:
- if within two years of the "disposition" the settlor is deemed to have a contractual debt towards the creditor. If an application to the Supreme Court is not to be time barred it must be commenced by the creditor within six years of the "disposition" or within six years of the day the contractual debt arose, whichever is the later;
- if at the time of the "disposition" the settlor had a contingent liability towards the creditor. Where the liability was contingent an application to set aside a "disposition" must be commenced within six years of the "disposition" if it is not to be time barred;
- if within two years of the "disposition" the creditor had the right to bring a legal action against the settlor for an outstanding debt . If the application by the creditor to the Supreme Court to set aside the disposition is not to be time barred it must be commenced either within six years of the disposition or within six years of the legal action accruing, whichever is the later.
In any application to set aside a "disposition" the burden of proof lies on the creditor to prove that the settlor wilfully intended to defeat the obligation owing to the creditor by making the "disposition".