International Exempt Trust
Registration and Administration
International Exempt Trust
Registration and Administration
To qualify as an international trust under the Nevis International Exempt Trust Ordinance, the following criteria must be met:
1) at least one trustee must be either a trust company doing business in Nevis or a company incorporated under the NBCO;
2) the settler and beneficiaries must at all times be non-residents of Nevis; and:
3) the trust property must not include any land situated in Nevis or its sister island, St. Kitts.
Other features of the trust are that the trust assets and income deriving from the corpus of an international trust are exempt from all exchange controls and estate, corporate, gift, income, inheritance, withholding, succession and stamp taxes in Nevis.
Under the Nevis International Exempt Trust Ordinance, the international trust can be created with only one trustee and the Settlor or trustee of the trust may also be named as a beneficiary.
Nevis Trust – Proper Law
The proper law of the trust is the Law of the jurisdiction expressed by the terms of the trust as proper law, with which the trust at the time it was created had the closest connection; or failing either, the proper law of the international trust shall be the law of Nevis.
Duration of Nevis Trust
The rule against perpetuities does not apply. A Nevis international trust may continue for one-hundred years from the date of commencement of its existence and forced heirship rules cannot invalidate the trust.
Asset Protection Provisions
An Important feature of the Ordinance relates to fraudulent dispositions. A creditor seeking to set aside a transfer to an International Trust is required to establish beyond reasonable doubt that the transfer constituted a fraudulent disposition. The Nevis Ordinance expressly states that “a trust settled or established and a disposition to such trust shall not be fraudulent as against a creditor of a Settlor:
(a) If settled, established or the disposition takes place after the expiration of two years from the date that such creditor’s cause of action accrued; or
(b) Where settled, established or the disposition takes place before the expiration of two years from the date that the creditor’s cause of action accrued, and that creditor fails to commence such action before the expiration of one year from the date such settlement, establishment or disposition took place.
Furthermore, every creditor, before bringing any action or proceeding against any trust property shall first post and pay a bond with the court as a security deposit; foreign Judgments against the trust are not enforceable in Nevis. Any civil action to recover assets from an international trust must be brought anew in the Courts of the Federation of St. Kitts and Nevis.
Note that the Ordinance provides for the appointment of a Protector, who is responsible for monitoring the operations of the international trust. This provision allows the Protector to ensure that the purpose of the international trust is fulfilled. The Ordinance was recently amended to clarify the role of the Protector who has the authority to direct a trustee to make and approve distributions made by a trustee or direct the trustee to make particular investments. Statutory protection is also given to the trustee for acting in accordance with the directions of a Protector absent the trustee’s own wilful misconduct.
Trusts in Nevis – Taxes and other Exemptions
The assets and earnings of a Nevis International Exempt Trust are exempt from all exchange controls and all forms of taxation and stamp duty in Nevis.
Confidentiality on Nevis Trusts
The confidentiality and the privacy of international trusts are ensured by legislation. Though a trust register is maintained, it only records the name of the trust and the date of settlement and is not a public document available for inspection. The only exception is where a trustee of a specific trust gives written authorization to a person allowing the inspection of the entry of that trust on the register. The Ordinance provides that all non-criminal judicial proceedings relating to the trust shall be heard in private and that no details may be published without leave of the court.
Changes to the Fraudulent Conveyance Provisions
The new amendment to the fraudulent conveyance provisions as set out in Section 24 of the Ordinance accomplishes the following:
Limits the claims of a creditor alleging fraudulent conveyance to the property transferred in an alleged fraudulent transfer.
Defines a cause of action for purposes of starting the limitations time period as the earliest cause of action capable of assertion by the creditor against the Settlor.
Requires the creditor who wishes to allege fraudulent conveyance in the Nevis judicial proceeding to make all possible claims against all possible parties, including possibly the trust beneficiaries, at the time when the claims are first made, or risk being unable to raise such claims in future proceedings involving any such parties with a material interest.
Expands the definition of creditor for these purposes to include not only those persons who allege a cause of action, but also any judgment creditor or assignee of a creditor.
Prohibition of Using Nevis Trusts
To Further Criminal Activity
To prevent the use of Nevis trusts by those involved in criminal activities, this Amendment provides that the trust shall be invalid and unenforceable if any part of the trust assets are the proceeds of a crime for which the settler is convicted.
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