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Trusts and Foundations

Trusts and Foundations

When Offshore Goes Mainstream: IFCs’ Transformation Into Leading Trust Jurisdictions

Andrew Morriss
Bush School of Government & Public Service and School of Law, Texas A&M University, College Station, Texas, USA

As virtually every treatise on the subject reminds us, trusts are a quintessentially English invention. Texts often quote a French lawyer’s observation that “the trust is the guardian angel of the Anglo-Saxon, accompanying him everywhere, impassively, from the cradle to the grave” to reinforce this point [1]. But while trust law’s origins are certainly English, trust law’s centre of gravity has shifted and modern trust law is not only not exclusively English, but its most important developments take place in jurisdictions outside Great Britain, including in the Caribbean.

If we evaluated trust law based on the jurisdiction for case law citations, we’d still have a picture of a predominantly English body of law. But if we look at the jurisdiction of the courts creating judgments in the most important decisions, and at which jurisdictions have intervened by statute to introduce innovations, a different picture emerges. Thus, while many of the people shaping trust law’s future continue to have an English connection, including lawyers and judges who received some or all of their legal training in Britain, and the body of English precedent continues to be influential, trust law is now international.

As the development of non-charitable purpose trusts, flight clauses, statutory Hastings-Bass doctrines, and a host of other innovations attest, it is outside Britain’s borders that trusts are evolving into methods of solving the problems of individuals, families, and businesses for today and tomorrow. This development should be welcomed, because it means trust l…

Trusts and Foundations

The USA As An Asset Protection Jurisdiction

Alexander A Bove
Bove & Langa

There was a time when an ‘estate plan’ consisted of a will, which, of course, only took affect at death, so families did not have to do a lot of thinking about their ‘estates.’ Then, as estates became more valuable and spread out, such a plan came to encompass not only a will, but also one or more trusts to hold the family assets, and families not only had to contend with exposure to estate taxes, but also faced exposure to creditors seeking to take the family property for one claim or another. Thus, today’s estate plan is required to contend with family planning, tax planning, and asset protection planning as well. The last of these is the reason that more and more US and non-US families are taking advantage of the growing number of states in the US that are offering ‘self-settled asset protection trusts.’

This is a trust that a person (the settlor) would establish primarily for herself as a beneficiary, with protection of the trust assets from her creditors as an objective. For centuries, such trusts were deemed to be against public policy, and creditors of the settlor/beneficiary were allowed to reach the full amount of the assets that the trustee was allowed to pay to or for the beneficiary.

Then, beginning in the 20th century, one by one by one, a number of the non-US common law jurisdictions, including most in the Caribbean but also the Pacific, began to realise that the allowance of such self-settled trusts could bring new money into the jurisdiction, and so they began to pass laws providing that such trusts established in their jurisdiction would be protected from attack by creditors of the settlor/beneficiary. And they were right. Over the years, billions of US (and other countries’) dollars poured into the new asset protection jurisdictions to fund the self-settled spendthrift …