Bermuda
Legal
Country code – BM
Legal basis – Common law
Legal framework – Trustee Act 1975 (As amended)
Formal name – Trust
Settlor – The settlor is the person who establishes and whose assets are put into the trust. It may be either an individual or a legal entity. Corporations can also act as settlors or Settlor or Grantor. The identity of the settlor or grantor will not always be apparent on the face of the document constituting the trust as to where a trust is created solely by the trustee.
The settlor may also be the beneficiary of the assets and may, subject to certain provisions, retain control of the trust. There may not be protected from a subsequent bankruptcy after assets are gifted to the trust.
Trustee – Trustees are natural or legal persons who hold the title to the assets and manage the trust, but they cannot benefit from it.
There is no requirement for the Trustee to be resident in Bermuda although there may be stamp duty implications if no trustee is resident in Bermuda. Individuals, public trust companies or private trust companies are eligible and most commonly serve as trustees.
Custodian trustees are not permitted.
Beneficiaries – Beneficiaries are those who get benefit from the trust. Beneficiaries may be natural persons or body corporates.
There are no specific provisions to prevent beneficiaries from draining the trust of its assets and spending in a thrifty way. Trusts in Bermuda allows avoiding both probate and forced heirship rules.
The beneficiaries can be named specifically in the deed or may be referred to by class in a schedule to the deed.
A beneficiary has the right to require a trustee to provide him with information that will enable him to determine whether the trust is being administered correctly. Thus, he has a right to see the trust’s accounts and all other reasonable information regarding the management of the trust property. However, trustees exercising discretionary powers, they cannot be required to disclose the grounds for the exercise of these powers.
Protector – A protector is not mandatory. If a protector is to be appointed, the first protector will usually be named in the deed and provisions for the removal and appointment of successor protectors will be set out in the trust deed. The appointment of a protector may facilitate checks and balances, especially where the settlor or grantor needs to be removed from the trust.
Disclosure - The trust deed and other trust documents are private and confidential. There is no requirement to seek any governmental or other approval for the establishment of a trust. There are no filing requirements with respect to trusts.
The information regarding the settlor and beneficiaries must by statute be kept confidential.
Protection from foreign judgements – The Trustee act is unclear regarding ignoring and not enforcing foreign judgments. The Hague Convention on Trusts does not apply in Bermuda.
Protection from creditors – The Trustee act does not repeal the Statute of Elizabeth, so transfers by the settlor to the trust may be set aside if the settlor transferred the property before the debt arose. The creditor must prove the fraudulent transfer of assets to the trust, which are not clearly defined by the law. Creditors’ claims may be brought jointly. If a fraudulent transfer is proven, trust may be declared invalid.
Protection for immigrant trusts – Trusts that migrate from other jurisdictions do not benefit from retroactive protection.
Community property – Community properties transferred to a Bermuda trust may not retain its community property character.
Exclusion of foreign law - There are limited exclusions in the legislation to be able to exclude foreign law.
Choice of law – The choice of law of Bermuda to govern the trust or a particular aspect of that trust, is valid, effective and conclusive regardless of any other circumstances.
Duration - The maximum duration of a Bermuda trust is 100 years; charitable trusts may last indefinitely.
Compliance – A trustee shall keep accurate accounts and records of the trustee’s trusteeship.
There are no reporting requirements for a trust in Bermuda.
- Settlor as a beneficiary
- Bankruptcy protection
- Ignore foreign judgements
- Hague convention on trusts
- Choice of law is binding
- Protection from immigrant trusts
- Community property provisions
- Custodian trustee permitted
- Rule against perpetuities (years)
- Limited Specific exclusion of foreign law
- Subject to CL rules Settlor can retain control
Protection of Settlor
Protection from foreign judgements
- Avoidance of forced heirship
- Spendthrift provisions
- Exclusion of Statute of Elizabeth laws
- Trust invalid if transfer fraudulent
- Creditor must prove fraudulent transfer
- Clear definition of fraudulent transfers
- Separation of creditor claims
- Statutory limitation on fraudulent transfer
Protection of Beneficiary
Transfers
Taxes
A trust established in Bermuda may not be subject to local taxes applicable to the assets and income of the trust, provided that no residents of Bermuda benefit from the trust and no physical assets are located there.
It must be noted that the choice of law of the trust would not be applicable to tax matters, which would be governed by the respective jurisdiction where the settlor, beneficiaries, assets or trustee are located, as applicable.
You should consult with your tax advisor or accountant to know the tax implications in your jurisdiction of residence when establishing a trust in Bermuda, transfer assets to it and receive profits from said assets.
- Offshore Income Tax Exemption
- Offshore capital gains tax exemption
- Offshore dividends tax exemption
- CFC Rules
- Thin Capitalisation Rules
- Patent Box
- Tax Incentives & Credits
- Property Tax
- Wealth tax
- Estate inheritance tax
- Transfer tax
- Capital duties
- - Offshore Income Tax Rate
- - Corporate Tax Rate
- 0% Capital Gains Tax Rate
- 0% Dividends Received
- 0% Dividends Withholding Tax Rate
- 0% Interests Withholding Tax Rate
- 0% Royalties Withholding Tax Rate
- 0% Personal Income Tax Rate
- 0% VAT Rate
- 0 Tax Treaties
Country details
The Bermuda Islands are a British overseas territory located in the North Atlantic Ocean off the east coast of the United States. The closest American continent point is the Cape Hatteras in North Carolina, located 1,030 km to the northwest, while the city of Miami is 1 770 km to the southwest. It has just over 67,000 inhabitants and its capital is Hamilton.
Bermuda forms the northern peak of the legendary Bermuda Triangle, a large maritime area in which it is said that they have been disappeared numerous ships and aircraft in unexplained circumstances. The archipelago is in an adverse climate area prone to be hit by hurricanes.
Its official currency is the Bermudian Dollar (BMD), pegged to the US$ at a 1:1 ratio.
The executive power in Bermuda resides in the monarch and is exercised in his name by the Governor. The governor is appointed by the King on the proposal of the British Government. The head of government is the prime minister.
The cabinet is proposed by the prime minister and officially appointed by the governor. The Legislative Branch consists of a bicameral parliament inspired by the Westminster system. The Senate is the Upper House, composed of eleven members appointed by the governor on the proposal of the prime minister and the leader of the opposition.
The House of Assembly, or lower house, has thirty-six members elected by the population with the right to vote by secret ballot.
The country has one of the highest per capita income worldwide. Its economy is based on insurance and reinsurance, banking and financial services, as well as tourism, which accounts for approximately 28% of GDP. Bermuda has a robust international business and financial sector, which accounts for 60% of its GDP.
The industrial sector is small, and agriculture is severely limited by the lack of adequate land.
Services
Please, contact us to request a free, no obligation consultation.