Turk & Caicos Islands *
Trust
The Turks and Caicos Islands (TCI), a British Overseas Territory located in the Caribbean, have established themselves as a discreet and effective jurisdiction for the establishment of offshore trusts. The jurisdiction combines common law principles with modern legislation, offering a stable and flexible legal environment for private wealth structuring, estate planning, and asset protection. This overview outlines the key features, legal considerations, and typical uses of trusts in the Turks and Caicos, focusing on both local regulations and their relevance in an international offshore context.
Trusts in the Turks and Caicos are governed by the Trusts Ordinance (as amended), which draws heavily on English common law but includes statutory enhancements that address modern estate planning needs. The Ordinance supports the establishment of both fixed and discretionary trusts and recognises various forms including charitable, non-charitable purpose, and spendthrift trusts.
TCI law provides for the recognition of foreign trusts and foreign judgments, though protections exist to ensure that TCI courts retain jurisdiction in trust matters where public policy or overriding local legal principles are at stake.
Trusts in the jurisdiction are typically governed by English trust law principles to the extent not overridden by local statute. As such, the role and duties of trustees, the rights of beneficiaries, and the enforceability of trust instruments are generally in line with internationally accepted common law standards.
The creation of a trust in TCI does not require a government registration process. There is no requirement to file the trust deed publicly, ensuring confidentiality. The trust is typically created by a settlor transferring legal title of certain assets to a trustee, who holds and administers them for the benefit of beneficiaries or to carry out a specified purpose.
The key parties to a trust are:
- Settlor: The individual or entity creating the trust.
- Trustee: The person or corporate entity with legal title to the trust property, responsible for its administration.
- Beneficiaries: Those with beneficial interest in the trust’s assets or income
- Protector (optional): A party who may be given the authority to oversee the trustee’s actions, often with powers to appoint or remove trustees.
TCI law allows for both revocable and irrevocable trusts, though irrevocable trusts are generally preferred for asset protection purposes.
Trusts can exist for an indefinite period, allowing for multi-generational wealth planning. However, the trust deed may still specify a fixed duration if desired by the settlor.
Turks and Caicos trusts are often used as asset protection vehicles. The Trusts Ordinance contains provisions that provide some insulation against forced heirship claims and creditor challenges. Specifically, the law includes clauses aimed at limiting the enforceability of foreign judgments that conflict with the terms of a trust governed by TCI law.
Key features include:
- Non-recognition of Foreign Heirship Rules: The Ordinance provides that the validity of a trust shall not be affected by foreign laws that prescribe mandatory succession or inheritance rules.
- Fraudulent Transfer Provisions: While the jurisdiction does not encourage the use of trusts to defraud creditors, it does place the burden of proof on claimants to demonstrate both intent and the impact of transfers made with fraudulent purpose. Typically, creditors must initiate action within a relatively short statutory window after the transfer occurs.
The Turks and Caicos Islands do not levy direct taxation. There are no income taxes, capital gains taxes, inheritance or estate taxes, or withholding taxes. This tax neutrality makes TCI trusts attractive for structuring cross-border wealth and investments, though proper planning must consider the tax obligations of the settlor and beneficiaries in their respective jurisdictions of residence.
Trustees and related professionals are required to comply with record-keeping obligations and must maintain information on settlors, protectors, and beneficiaries for regulatory purposes. These requirements align with TCI’s commitment to international transparency and financial integrity.
Trustees may be individuals or corporate entities. Corporate trustees providing professional services must be licensed under the Financial Services Commission Ordinance and are supervised by the Turks and Caicos Islands Financial Services Commission (TCIFSC). The regulatory regime emphasises fitness and propriety, competence, and AML/CFT compliance.
Private trust companies (PTCs) are permitted and may act as trustees for a limited number of related trusts. PTCs provide families with greater control and continuity in trust administration, though they must typically engage a licensed trust service provider for management and compliance functions.
The Turks and Caicos Islands provide a modern and flexible legal environment for the establishment and management of offshore trusts. With strong common law roots, robust asset protection features, and a tax-neutral framework, TCI trusts serve a variety of legitimate estate planning and asset structuring functions for international clients.
Legal *
Country code – TC
Legal basis – Common law
Legal framework – Trusts Ordinance 2016
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.
The settlor may reserve significant listed powers for himself without affecting the validity of the trust and may also be a beneficiary. There may be protection from a subsequent bankruptcy after assets are gifted to the trust.
Trustee – Trustees are the legal owner of the assets who have a fiduciary and statutory obligation to act in the best interest of the beneficiaries.
The number of trustees of a trust shall be not less than two unless only one trustee was originally appointed or the sole trustee is a professional trustee, or the terms of the trust provide otherwise.
Trustees may be corporate bodies or individuals.
Custodian trustees are not permitted.
Beneficiaries – Beneficiaries are those who get benefit from the trust. Beneficiaries may be natural persons or body corporates.
The terms of a trust may provide for the addition or removal of a person as a beneficiary or the exclusion of a beneficiary from benefit either revocable or irrevocable, may impose an obligation on a beneficiary as a condition of benefit.
There are no specific provisions in the law to prevent beneficiaries from draining the trust of its assets and spending in a thrifty way. There are specific legislative provisions to avoid probate and forced heirship.
Enforcer – An enforcer is not mandatory, unless for purpose trusts.
Disclosure – The trustee is not required to disclose to any person any document showing he has exercised a power or discretion or performed a duty, nor to disclose to any person other than a beneficiary any document relating to or forming part of the accounts of the trust, unless required to do so by the terms of the trust or by an order of the court.
Protection from foreign judgments – The Trusts Ordinance includes limited provisions to ignore and not enforce foreign judgments. The Hague Convention on Trusts does not apply in Turks & Caicos.
Protection from creditors – The Trusts Ordinance 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 is clearly defined by the law. Creditors’ claims may not be brought jointly. If a fraudulent transfer is proven, the trust may not 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 Turks & Caicos trust may not retain its community property character.
Exclusion of foreign law - There are provisions in the legislation to be able to exclude foreign law.
Choice of law – The choice of law of Turks & Caicos to govern the trust or a particular aspect of that trust, is binding, valid, effective and conclusive regardless of any other circumstances.
Duration – There is no rule against perpetuities. An instrument creating or varying a trust may provide for the duration and date of termination of the trust.
Compliance – There are no annual reporting requirements.
- 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 the Turks & Caicos Islands may not be subject to local taxes applicable to the assets and income of the trust, provided that no residents of the Turks & Caicos Islands 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 the Turks & Caicos Islands, 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 Withholding Tax Rate *
- 0% Interests Withholding Tax Rate *
- 0% Royalties Withholding Tax Rate *
- 0 Losses carryback (years) *
- 0 Losses carryforward (years) *
- 6% Personal Income Tax Rate *
- 0 Tax Treaties *
Country details *
The Turks and Caicos Islands are a British overseas territory, consisting of the larger Caicos Islands and smaller Turks Islands, two groups of tropical islands in the Lucayan Archipelago of the Atlantic Ocean and northern West Indies. They are located north of the island of Hispaniola where Haiti and the Dominican Republic are located.
Cockburn Town, the capital, is about 1,042 kilometers (647 miles) to the southeast of Miami. The islands, with 948 sq. km of total surface area, are geographically contiguous to the Bahamas.
Its official language is English and its official currency is the United States Dollar (USD).
As a British territory, its sovereign is Queen Elizabeth II of the United Kingdom, represented by a governor appointed by the monarch, on the advice of the Foreign Office.
The Turks and Caicos economy, like other Caribbean islands, is based on tourism, offshore financial services, and fishing.