The Bahamian trust is
considered a private
agreement between the
parties concerned, therefore,
registration with a
government agency is
not required. No busines
license fees, filing fees,
or registered office fees
are payable. Professional
service fees depend on the complexity of establishing
the trust.
Forming A Bahamian Trust
There are several ways to form a Bahamian Trust. The trust document can vary in size, depending on its requirements and the complexity of the dispositive provisions. Any lawyer or competent individual can write up a trust document, However, to ensure compliance with Bahamian Trust law, and avoiding the document being ruled invalid by a court, the document should be reviewed and approved by a Bahamian attorney. Some institutions have standard trust documents in which certain items, such as dispositive provisions, are included in one of the schedules. Such standard documents should also be approved by a Bahamian attorney.To establish a Bahamian Trust, it is necessary for the attorney or trustee to know:
- who the beneficiaries are going to be;
- how and when the beneficiaries are going to
receive their share of the trust's assets;
- if there is going to be a protector named in the
trust document, who that person is;
- what powers the protector is going to have and
how to appoint his/her successor.
(Note: A protector is not subject to the same degree of responsibility as the trustee, under law. There can be a "letter of wishes," in which the settlor states in detail what is to happen to the trust's assets during and after his/her lifetime.)
Under normal circumstances, in order to establish a trust, the trustee will charge between US$1,000 and US$3,000. The trust law in The Bahamas implies that all the trustee's powers must be stated in the trust document. There is no section in the Trust Act which specifies general powers of the trustee and which can be referred to in the trust document. Thus, if the trust document does not allow for the compensation of the trustee, then the trustee cannot take a fee. In some cases, broad discretionary powers may be given to the trustee, or very strict rules may be laid down. Once the trust is set up, the annual trustee fee can either be based on a flat fee or on a percentage of the assets. If the former, the fee will range from US$1,000 to US$5,000 a year; if the latter, the fee will range from 0.25% to 1%. The range depends on the complexity of administration and the risks involved to the trust company.
Trust Laws
The laws governing trusts in The Bahamas are similar to those of Great Britain and other common law jurisdictions. The concept of the Trust is an integral part of Bahamian Law. The principal statutory instrument is the Trustee Act, 1893, which sets out the court's powers as to the administration of a trust and the regulation of trustees. Bahamian law allows for the establishment of three types of trusts:
- Standard Trust, also an asset protection
trust. It can be either "revocable" or
"irrevocable,"
"discretionary" or
"non-discretionary."
- Testamentary Trust, which becomes active
upon the death of the settlor and the assets are
turned over to the estate.
- Charity Trust has the advantage of having no perpetuity period, which in The Bahamas is approximately 80 years. To qualify, beneficiaries have to be genuine charities as defined in law.
- The Trust (Choice of Governing Law) Act, 1989
This Act permits a settlor to expressly declare that Bahamian Law will be the governing law of the Trust, and such a declaration will be recognized by the Bahamian courts as valid and conclusive regardless of any other circumstances. The Act also recognizes provisions in a trust deed for the changing of the governing law to or from the laws of The Bahamas. The legislation addresses several other areas concerned with the administration validity and capacity of a settlor to a Bahamian Trust and is intended to eliminate many of the jurisdictions that may be at issue, such as concepts of forced heirship or community property.
The Fraudulent Disposition Act, 1991
This Act is known in many jurisdictions as "Asset Protection Trust" legislation. It provides that every disposition of property made with an intent to defraud and at an undervalue will be voidable and can be set aside by professional business persons who wish to insulate some of their assets from future claims not in existence at the date of the gift. The burden of establishing fraudulent intent falls on the claimant seeking to challenge the disposition, with the Statue of Limitations set at two years from the date of the disposition.
