Offshore Trusts: Asset Protection in Dominica
Dominica, is considered a leader in offshore jurisdictions that are used for offshore Trusts and offshore company formations; for asset protection and estate planning as effective means of minimizing taxes, protecting assets and passing wealth along to hiers in private and without devastating tax consequences.
As official offshore registered agents by the government of the Commonwealth of Dominica, we have the offshore experience, and are authorized to provide you with these services with the utmost of integrity.
Modern asset protection provisions spelled out in the Act’s Part 5, Section 22 on Powers of the Court and Part 9 entitled Miscellaneous offer standard protection against another jurisdiction’s forced heir ship and community property laws, except when matrimonial property was designated as community property immediately before it was disposed by a husband and wife to the trust. A registered international trust is enforceable and valid even though invalid according to the law of the settlor’s domicile and residence or place of current incorporation.
A creditor bringing an action against a trust must deposit $25,000 in cash as security for court costs if he loses his case. To be successful in court, the burden of proof is on the creditor to prove fraudulent disposition, including evidence that the creation of a trust or disposition to a trust rendered the settler insolvent. If the fair market value of the settlor’s owns property immediately after a disposition to the trust exceeded the value of the creditor’s claim, then the trust is exonerated from the charge of fraudulent disposition.
Your assets are protected by the limitation of time for the bringing of a Claim. Roadblocks to a successful suit are strengthened by regulations requiring action against the trust to be taken within two years after the creditor’s cause of action accrued and within one year after the disposition to the trust took place. This effect of provision is that all actions against the trust must be filed within two years of the accrued cause of the action. Anytime after that you are virtually out.
An international trust is declared invalid only to the extent necessary to satisfy the obligation of a creditor who is also entitled to costs allowed by the High Court. Should an entire trust be invalidated and provided a beneficiary has not acted in bad faith, the beneficiary has first rights to the trust property in an amount equal to his defense costs.
Registration of International Trusts is handled at the Registry, and a register of International Trusts is maintained by the Registrar of Companies. An application for registering an International Trust must be accompanied by the following:
|The prescribed fee of US$150.00;|
|Notice of the name and registered office of the trust;|
|A certificate from a lawyer certifying that the trust, upon registration, will be an international trust.|
|The Registrar then enters the name of the Trust and the address of the registered office in the register and issues the Certificate of Registration.|
The International Exempt Trust Act, 1997 grants exemption from all income tax and from stamp duty on all instruments relating to trust property or to transactions conducted by the trustee on behalf of the trusts. The law is silent about estate, inheritance, succession, gift, and capital appreciation taxation.
International trusts are also exempt from exchange controls. Criteria for being beneficiaries are at all times non-resident; (2) trust property does not include any Dominica land; and (3) at least one trustee is either a corporation incorporated under the 1994 Companies Act or 1996 IBC Act, or a licensed bank or trust company doing business in Dominica. Beneficiaries can include the settler, protector and trustees.
Annual renewal fees become due on the anniversary of registration on the prescribed application form, renewal fee is US$150.00.
The fees for a licencee to engage in trust business are as follows:
|General Trust Business US$4,000.00|
|Restricted Trust US$100.00|
and are to be made payable to the Government of Dominica.
We will assist you to submit your application, with all supporting documentation and evidence of payment of the licence fee to the Treasury. Contact us for more information.
Perpetuty and Purpose
The maximum duration of an international trust is 100 years from the date of its creation, except that a charitable trust and purpose trust are not tied down to this limitation. Trust terms may direct or authorize accumulation of all or part of trust income during the trust’s lifetime.
An international trust may be created for a non-charitable purpose provided that the purpose is specific, reasonable and capable of fulfillment and is not immoral, illegal or contrary to Government and public policy. A protector who can enforce the trust and a successor protector must be appointed.
Spendthrift (also known as protective), charitable and purpose trust can be established. As is customary in many other jurisdictions, a charitable trust can be established for purposes beneficial to the community, such as relief of poverty, advancement of education and religion, protection of the environment, and the advancement of human rights and fundamental freedom, and other beneficial purposes. A purpose is not regarded as charitable unless it benefits either the whole or a substantial section of the community, either within Dominica or outside.
All international trusts must be registered with the Registrar under a simple procedure. An application for entry on the register should be accompanied by:
|the prescribed fee;|
|a notice of the name and registered office of the trust;|
|a certificate from a barrister or solicitor|
A certificate of registration is valid for one year and must be renewed annually by repeating the original procedure. The trust’s obligatory registered office has to be the office of the trust company or a corporation, which is a trustee. Contact us for more information.
Laws of an International Trust
The proper law of an international trust shall be:
|the law expressed by the trust terms or intended by the settler to be the proper law;|
|aif no such law is expressed or intended, the law with which the international trust has its closest connection at the time of its creation;|
|if the two previous conditions do not apply, then the proper law is the law of Dominica|
A trust’s term may provide for its sever able aspects (particularly) those relating to trust administration to be governed by a different law than the trust’s proper law.
Also, the law governing a sever able aspect may be changed from the law of Dominica to the law of another jurisdiction and vice versa.
The court has jurisdiction over an international trust when the proper law of the trust is the law of Dominica; a trustee of the trust is resident in Dominica; or any part of the trust’s administration is carried on in Dominica.
Protection of Beneficiaries
A protector is optional for other international trusts. In addition to having the power to remove a trustee and to appoint a new or additional trustee, the protector owes a fiduciary duty to the trust beneficiaries or to the purpose for which the trust is created. Other powers can be conferred upon the protector by the terms of the trust.
Although the protector may also be a settlor, trustee, or beneficiary of the trust, in the exercise of the protector’s function this official shall not be counted or regarded as a trustee.
|by the Attorney General|
Additional protection for beneficiaries is provided by the Attorney General under the 1996 Offshore Banking Act. If the Attorney General suspects that an offense against this act has been or is being committed, he may take action to preserve assets of trust beneficiaries.
For more information about exempt insurance offshore, please do not hesitate to contact us.