Offshore Trusts Report: Barbados
Legal Framework and Formation Rules and Fees
Trusts in Barbados are governed by English common
law and by the Trustees Act Cap 250 as amended, which deals with
the powers of trustees. There is no registration requirement or
stamp duty; trustees can be non-resident as long as one is resident.
A resident corporation acting as trustee must be licensed under
the Offshore Banking Act. Exchange controls apply to local trusts.
The Hague Convention has not been implemented.
The International Trusts Act 1995 introduced purpose
trusts and asset protection trusts, as well as strengthened protection
against forced heirship provisions, non-recognition of foreign judgements,
and protection against creditors.
Creditors have three years in which to set aside the
terms of a trust, but can only do so if they can establish an intent
to defraud. A successful creditor can only set aside the terms of
the trust in so far as he is prejudiced - he can't overset the whole
thing unless that is necessary to satisfy him.
The rule against perpetuities does not apply, and
accumulation of income is permitted for up to 100 years.
The following conditions must be fulfilled when a
trust is formed:
the settlor must be non-resident when the trust is created
and at subsequent times when property is added to the trust;
trust property must not include Barbadian real estate or
an interest in it;
no beneficiary other than a Barbadian offshore entity can
be a resident of Barbados at the time of creation of the trust,
or at the time of any subsequent addition of property to the
at least one of the trustees must be resident in Barbados.
Note that beneficiaries can include Barbadian offshore
entities - this means an exempt insurance company, an offshore bank,
and an international business company. The Act defines 'resident'
to include: ordinarily resident individuals, bodies, whether incorporated
or not, majority-owned by residents; and trust management companies.
The Act lays down specific confidentiality rules,
protecting the identity of settlor and beneficiaries, the workings
of the trustees, the reasons behind trustees' actions, accounting
information, etc. Confidentiality can only be broken by the Court
or at the request of a beneficiary.