The Bahamian trust
considered a private agreement between the
parties concerned, therefore,
registration with a
government agency is
not required. No busines
license fees, filing fees,
or registered office fees
are payable. Professional service fees depend on the complexity of establishing the trust.
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||Forming A Bahamian
There are several ways to form a Bahamian Trust. The trust document
can vary in size, depending on its requirements and the complexity of
the dispositive provisions. Any lawyer or competent individual can write
up a trust document, However, to ensure compliance with Bahamian Trust
law, and avoiding the document being ruled invalid by a court, the document
should be reviewed and approved by a Bahamian attorney. Some institutions
have standard trust documents in which certain items, such as dispositive
provisions, are included in one of the schedules. Such standard documents
should also be approved by a Bahamian attorney.To establish a Bahamian
Trust, it is necessary for the attorney or trustee to know:
- who the beneficiaries are going to be;
- how and when the beneficiaries are going to receive their share of the
- if there is going to be a protector named in the trust document, who
that person is;
- what powers the protector is going to have and how to appoint his/her
(Note: A protector is not subject to the same degree of responsibility
as the trustee, under law. There can be a "letter of wishes," in
which the settlor states in detail what is to happen to the trust's
assets during and after his/her lifetime.)
A Bahamian Trust is not exclusive to Bahamian beneficiaries. Upon
establishment, the trust must be designated "resident" or "non-resident" for
Exchange Control purposes.
Under normal circumstances, in order to establish a trust, the trustee
will charge between US$1,000 and US$3,000. The trust law in The Bahamas
implies that all the trustee's powers must be stated in the trust document.
There is no section in the Trust Act which specifies general powers
of the trustee and which can be referred to in the trust document.
if the trust document does not allow for the compensation of the trustee,
then the trustee cannot take a fee. In some cases, broad discretionary
powers may be given to the trustee, or very strict rules may be laid
down. Once the trust is set up, the annual trustee fee can either be
based on a flat fee or on a percentage of the assets. If the former,
the fee will range from US$1,000 to US$5,000 a year; if the latter,
the fee will range from 0.25% to 1%. The range depends on the complexity
of administration and the risks involved to the trust company.
The laws governing trusts in The Bahamas are similar to those of Great
Britain and other common law jurisdictions. The concept of the Trust
is an integral part of Bahamian Law. The principal statutory instrument
is the Trustee Act, 1893, which sets out the court's powers as to the
administration of a trust and the regulation of trustees. Bahamian
law allows for the establishment of three types of trusts:
Trust, also an asset protection trust. It can be either "revocable" or "irrevocable," "discretionary" or "non-discretionary."
Trust, which becomes active upon the death of the settlor
and the assets are turned over to the estate.
Trust has the advantage of having no perpetuity period, which
in The Bahamas is approximately 80 years. To qualify, beneficiaries have
to be genuine charities as defined in law.
There are several new pieces of legislation specifically enacted to
make the Bahamian Trust a more effective instrument for today's global
financial market. They include:
The Trust (Choice of Governing Law) Act, 1989
This Act permits a settlor to expressly declare that Bahamian Law will
be the governing law of the Trust, and such a declaration will be recognized
by the Bahamian courts as valid and conclusive regardless of any other
circumstances. The Act also recognizes provisions in a trust deed for
the changing of the governing law to or from the laws of The Bahamas.
The legislation addresses several other areas concerned with the administration
validity and capacity of a settlor to a Bahamian Trust and is intended
to eliminate many of the jurisdictions that may be at issue, such as
concepts of forced heirship or community property.
The Fraudulent Disposition Act, 1991
This Act is known in many jurisdictions as "Asset Protection Trust" legislation.
It provides that every disposition of property made with an intent to
defraud and at an undervalue will be voidable and can be set aside by
professional business persons who wish to insulate some of their assets
from future claims not in existence at the date of the gift. The burden
of establishing fraudulent intent falls on the claimant seeking to challenge
the disposition, with the Statue of Limitations set at two years from
the date of the disposition.
The Bahamian trust is considered a private agreement between the parties
concerned, therefore, registration with a government agency is not required.
No business license fees, filing fees, or registered office fees are
payable. Professional service fees depend on the complexity of establishing
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