Offshore Trusts Report: Bermuda
Legal Framework And Formation Rules and Fees
Trust management has been a significant activity for Bermuda for
more than fifty years. Originally the main sources of trust business
were the UK, the USA and Canada, but more recently other parts of
the world have become increasingly important, as understanding of
the trust concept has spread more widely. Successive tightenings
of anti-avoidance legislation in the traditional markets have also
tended to reduce volume.
Bermuda has kept up to date with international trust practice but
has been cautious about asset protection trusts, and the Bermudan
legislation has attempted to draw a sustainable balance between
the interest of the settlor and the creditor, rather than going
all out for protection like many jurisdictions.
Bermudan trusts have traditionally been
governed by The Trustee Act 1975 which is largely based on the English
Trustee Act 1925. The Trusts (Special Provisions) Act 1989, another
significant statute, introduced the concept of the "purpose trust"
and brought Bermudan law still closer to English law. The Perpetuities
and Accumulations Act 1989 increased the perpetuity period to 100
years. Foreign inheritance laws are specifically excluded, and there
is provision for the non-recognition of foreign judgements.
Bermuda has adopted the Hague Convention; the Trusts
(Special Provisions) Act 1989 made some consequent adjustments to
the law. Appeal is to the English Privy Council.
In general, trustees need not be resident in Bermuda;
but one must be. The trust fund may comprise cash, land, securities,
interests in property or other trusts. Non resident trusts are not
permitted to hold Bermuda currency, shares or security in local
companies, or an interest in land in Bermuda without the prior consent
of the Bermuda Monetary Authority.