St. Kitts Nevis Coat-of-Arms

Trusts

St. Kitts Nevis Coat of Arms

Legal Framework

Overview

The use of the international trust has become increasingly imaginative and prolific and remains an important feature of estate planning and asset protection.

The Nevis International Exempt Trust Ordinance provides for the creation of various types of international trusts including Charitable Trust, Non-Charitable Trust, Spendthrift or Protective Trust and Qualified Foreign Trust. The assets and income of an international trust are exempt from all exchange controls and all forms of taxation and stamp duty in Nevis.

To qualify as an international trust under the Nevis International Exempt Trust Ordinance, the following criteria must be met:

·    There must be at least one trustee, which can be a corporation incorporated under the Nevis Business Corporation Ordinance;

·      The Settlor and Beneficiaries must at all times be non-residents of Nevis; and

·       The trust property must not include any land situated in St Kitts and Nevis.

 There are many important asset protection features of the Nevis International Exempt Trust Ordinance including:

1.    An international cannot be declared void, voidable or defective by reason of any forced heirship rules of the Settlor's domicile, residence, place of current incorporation, formation or establishment;

2.  The rule against perpetuities does not apply to an international trust and unless otherwise provided,  an international trust shall have unlimited duration. ;

3.    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.

4.    The Ordinance was amended recently to give a trustee additional powers to help achieve the purpose of an international trust by allowing the trustee to combine two or more separate trusts into a single trust or divide a single trust into two or more separate trusts provided that such action does not impair the rights of any beneficiary or adversely affect the purpose of the trust or trusts. Rules governing any such combination or severance are also provided for in the Ordinance.

5.    The Ordinance also allows property owned by tenants by the entireties (“TBE”) contributed to an international trust (or to a trust that subsequently becomes an international trust) by married couples to continue to be treated as TBE property. TBE is a form of property ownership for married couples that in many jurisdictions prevents the creditors of only one spouse from attaching to the property. This form of property ownership is severed upon contribution to a trust in the absence of a provision explicitly recognizing its continued existence.

6.    The 2015 amendment also expanded the list of authorized trust investments to include such assets approved by the protector so that trustees can hold a wider variety of assets.

7.     The sole remedy available to a creditor is to allege fraudulent transfer or disposition. If the Trust is settled after the expiration of one year from the date that the creditor's cause of action accrued or originated, it is not deemed fraudulent. In any event, a creditor seeking to set aside a transfer to an international  trust must prove beyond a reasonable doubt and with clear and convincing evidence that the transfer constituted a fraudulent disposition. Moreover, a creditor must deposit with the Ministry of Finance, a security bond of XCD$270,000.00 or US$100,000.00 before he can bring an action against an international Trust;

8.    A creditor of a beneficiary cannot compel or force a distribution with regard to a discretionary interest in an international trust or compel or force a trustee to exercise the trustee’s discretion to make a distribution with regard to a discretionary interest in an international trust. Neither can a creditor of a beneficiary compel or force a protector to exercise a power to direct a trustee to make such distributions to any beneficiary of an international trust. Furthermore, a trustee is permitted to make payments on behalf of the beneficiary without liability to any creditor.

9.     Creditors of a beneficiary of an international trust will have a right to a beneficiary’s interest only in the circumstances where the beneficiary has unfettered control of the trust property and exercises such control. Similarly, creditors will only have a right to a settlor’s interest in an international trust if that settlor has retained a power to revoke the international trust entirely and to appoint the trust property to the settlor, the settlor’s estate, the settlor’s creditors, or the creditors of the settlor’s estate, to the extent the settlor exercised such retained power.

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 willful misconduct.

The Proper Law of the international trust is the law of the jurisdiction expressed by the terms of the trust, or failing that, with which the trust at the time it was created had the closer connection. Failing either, then the proper law of the international trust shall be the law of Nevis.

The Ordinance also provides for there to be confidentiality with respect to the trust. Though an international trust register is maintained, it only records the name of the international 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 international trust gives written authorization allowing the inspection of the entry of that trust on the register.

However, AML/CFT Regulations mandate that the Registered Agent responsible for the registration of that international trust is under an obligation to maintain accurate and updated information on their customers and third parties on behalf of whom the customer is acting. This includes information on the settlor and beneficiaries of the trust. Additionally, the Ordinance provides that all non-criminal judicial proceedings relating to the international trust shall be heard in private and that no details may be published without leave of the court.

 

 

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Contact Information

The Nevis Financial Services (Regulation and Supervision) Department will be hosting its Annual AML/CFT Awareness Seminar and Training Workshop on Monday, March 06 and Tuesday, March 07, 2017 at the prestigious Four Seasons Resort under the theme, "Increasing Awareness through Smarter Compliance - Forging New Connections to Combat Financial Crime."
 

For further information, please contact the Financial Services Department at 469-1469 or via email at This email address is being protected from spambots. You need JavaScript enabled to view it..

 

Financial Services Regulatory Commission, Nevis Branch

P.O. Box 689, Main Street
Charlestown, Nevis
West Indies

Tel: (869) 469 - 1469
Fax: (869) 469 - 7739
Email:This email address is being protected from spambots. You need JavaScript enabled to view it. (Companies Registry and General Enquiries)

Email: This email address is being protected from spambots. You need JavaScript enabled to view it. (Compliance Division)

Email: This email address is being protected from spambots. You need JavaScript enabled to view it. (International Insurance Division)

Email: This email address is being protected from spambots. You need JavaScript enabled to view it. (International Banking Division)

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