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Trusts & Foundations

Seychelles International Trust

Seychelles International Trust FormationSeychelles International Trust is regulated by the Seychelles International Trust Act 1994. The Basis of trust law rests on the concept of “dual ownership” – namely that the legal title to assets is vested in one person (trustee) while the beneficial ownership of those same assets is vested in another person or persons (the Beneficiary). The trustee is bound by a fiduciary duty to exercise that legal control for the benefit of one or more individual or organizations who are the beneficiaries.

Advantages of Seychelles Trust

  • Lighter compliances and statutory requirements along with the names of settlor and beneficiaries not made public helps in maintaining confidentiality and privacy
  • Can be used for the benefit of employees (ESOP)
  • Can hold shares of IBC which can undertake commercial transactions
  • Redomicilation is permitted
  • Trust Deed is not required to be registered with Authorities.
  • The assets of the trust are administered and managed by the trustees. The settlor can still be in control either by appointing himself as one of the trustee or appointing a Protector, who will follow his wishes, summarized in letter of wishes.
  • Trust is fully tax exempt from any taxes in Seychelles.
  • Statutory protection is provided to assets of Trust through:
    -Protection against foreign rules of forced heir ship
    -Settlors bankruptcy/liquidation/other action proceedings by any creditor, unless the settlor was insolvent or intended to defraud his creditors

Key Features of Seychelles Trust

  • Functionaries of trust are settlor, trustee, beneficiary and protector
  • Minimum assets of trust USD 1
  • Constitutional document is Trust Deed, not available to public
  • Trust duration period is 100years, whereas charitable trust can be formed for perpetuity
  • Change in domicile is permitted
  • No disclosure of Beneficial Owner to the Registrar
  • Exempt from all taxes in Seychelles

Restrictions

  • Trust cannot hold immovable property in Seychelles
  • It cannot own shares of companies registered in Seychelles (Trust can hold shares of IBC)
  • Settlor cannot be resident of Seychelles
  • Settlor cannot be sole beneficiary of Trust

The Settlor

Is the person who “provides trust property or makes a testamentary disposition on trust or to a trust.” The settlor, creates the Trust by placing certain property that s/he owns into the Trust, i.e. by transferring that asset to another person (Trustee) along with the clear instructions that the asset be held for the benefit of a third party.

The Settlor may be either an individual or a legal entity.

Trustees

Is legal entity to which the Settlor transfers legal title to the Trust asset(s). While being the holder of the legal title means the trustee is in full control of the trust assets, the Trustee is nevertheless under a legal obligation to exercise a heightened fiduciary duty of care- trustees must maintain trust property in the best possible manner for the benefit of the Beneficiaries. Moreover, the Trustee is legally precluded from using the trust assets for his own ends, as the beneficial ownership resides with the Beneficiary.

The minimum number of Trustee is one, and must be a licensed Trustee in Seychelles.

The Protector

Is not a mandatory party to all Trusts, but maybe chosen by the Settlor. The Protector supervise the Trustee, thus providing additional assurances to the Settlor that the trust assets are properly managed.

The Seychelles International Trust Act does not specifically refer to protectors or guardians, but does expressly provide for the establishment of Trusts, which require the trustee to consult or obtain the consent of another person before exercising a particular function. As, such there is no impediment to the appointment of a protector or guardian. However, the appointment terms and the powers of the protector should be explicitly set forth in the Trust Deed or other appointment instrument in order to maintain the formalities required by the International Trust Act.

The Beneficiary

Is the third party for whose benefit and profit the trust asset is held and managed by the Trustee. The Beneficiary of Beneficiaries may be either specifically named in the Trust Deed or may be a sufficiently defined group of persons. The Settlor of the Trust may also be named as the Beneficiary, but may not be the sole beneficiary. Seychelles also supports trust for charitable purposes, and general purpose trusts.

Taxation

As long as all Trust income is derived from outside of the Seychelles, then Seychelles International Trusts, and the respective trust property is permanently exempt from income and business tax, estate, inheritance, succession or gift tax and all instruments relating to the trust property or to transactions carried out by the trustee on behalf of the trust are exempt from stamp duty.

Renewal

Renewal of BVI Trust, to be paid on anniversary date of incorporation. Failure to do so results in penalties.

Latest valid passport copy and recent utility bill for address proof of protector and beneficiaries are required to be submitted at every renewal as a part of enhanced due diligence.

Documents Required

  • Application form duly completed and signed
  • Passport copy duly certified.
  • Second identification.
  • Proof of domicile.
  • Letters of reference, one professional reference letter and one bank reference letter.
  • Letter of wishes (indicating the details on the beneficiaries)

Whilst every effort has been made to ensure that the details contained herein are correct and up-to-date, it does not constitute legal, tax or other professional advice. We do not accept any responsibility, legal or otherwise, for any errors or omissions.