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BVI Trustee Act

The establishment of trusts in the BVI is regulated in the Trustee Act, Cap.303. The Trustee Act was recently amended by law No.11, 2003 ( published in the Gazette on November, 6, 2003) which is the Trustee (Amendment) Act, 2003. The purpose of the amendment was to establish certain new rules for trusts which should make the BVI an atrractive Trust jurisdiction.

The Amendment introduced some rules regarding the dealings between trustees and third parties, which will make a BVI offshore trust a more attractive tool for commercial dealings.

The amendment introduced sections 83A and 84A to the Act, regarding Conflict of Laws and Purpose Trusts, sections 94 to 109, as well as new First Schedule.

The characteristics of the Trust are established in the Section 2 of the Trustee Act. They are as follows:

- the assets constitute a separate fund and are not part of the trustee's own estate;

- title to the trust assets stands in the name of the trustee or in the name of another person on behalf of the trustee;

- the trustee has the power and the duty in respect of which he is accountable to manage, employ or dispose of the assets in accordance with the terms of the trust and the special duties imposed on him by law.

Section 83A of the Trustee Act (and the First Schedule) deal with the new provisions of Conflict of Laws which may apply to BVI Trusts.  These new rules are likely to command a substantial degree of international recognition, as they establish a legitimate and rational approach to issues such as forced heirship, including preventing forced heirship foreign judgments from being enforced against BVI trusts.

Section 84A of the Trustee Act overhauls the provisions regarding purpose trusts. Generally speaking, a "Purpose Trust" is a trust which does not have any beneficiaries, or even general classes of beneficiaries. A Purpose Trust is not supposed to benefit anyone, but rather one that exists for a specific purpose. The purpose can be a specific purpose, such as to own a corporation, or for a general purpose such as to further the creation and preservation of fine art.

Section 84 provides the definition that a "trust for any purpose" means a trust other than a trust

- that is for the benefit of particular persons whether or not immediately ascertainable, or

- that is for the benefit of some aggregate of persons ascertained by reference to some personal relationship.

In order to create a valid purpose trust, it is necessary to meet the following criteria:

- the purpose must be specific, reasonable and possible;

- the purpose may not be immoral, contrary to public policy or unlawful;

- at least one trustees of the trust should be a designated person;

- the trust instrument should appoint an "enforcer" - who is the person, who may be a protector, to enforce the trust and provide for the appointment of a successor to such person;

- the enforcer should consent in writing to their appointment to enforce the trust; and

- the trust instrument must specify the event upon the happening of which the trust terminates and provide for the disposition of surplus assets of the trust upon its termination.

There are also provisions in the amendment that concern the variation of the purposes (due to impossibility, etc.) and an exemption from the rule against perpetual trusts for purpose trusts and anti-abuse provisions.

New Parts of the Amendment:

Part X of the Trustee Act confronts issues of third party dealings.

Part XI of the Trustee Act is borrowed from UK Charities legislation and deals with Charitable trusts.