Belizean trusts are formed and governed under the Trusts Act, 1992, designed to incorporate flexible and modern asset protection provisions.
A Belize trust may not be set aside because of claims from creditors in other jurisdictions or the order of a foreign court on account of bankruptcy, divorce, etc.
The Act allows the creation of a trust, except for a unit trust, by oral declaration, an instrument in writing, conduct, operation of law or by any other means. As to a unit trust, however, it can be created only by an instrument in writing. A trust, except for a constructive trust, situated in Belize is not enforceable if not evidenced in writing.
The main advantages of Trust are as follows:
- saving on inheritance tax (on death, the inheritance tax, normally assessed on the value of the shares, would generally be eradicated);
- asset protection (assets within trust usually cannot be reached by creditors who might arise as a result of financial difficulties, litigation, divorce proceedings, etc.);
- avoiding probate (by means of a trust, assets can be smoothly passed on to the next generation without the disruption, substantial costs, delays, loss of confidentiality, etc.);
- lifetime tax savings (during lifetime, substantial income and capital gains tax advantages may result from setting up the trust).
Registration of trusts is optional in Belize. Either the settlor or a trustee applies to the Registrar. If a trust is registered, a certified copy of the instrument creating the trust as well as a fee of USD 200 is to be submitted. The Register is not open for inspection. Exception is made when the trustee of a trust in written form authorises a person to inspect the entry of that trust on the Register.
The maximum duration of a trust, except for a charitable trust, under Belize law is 120 years from the date of its establishment. Trust income accumulation may not exceed the maximum duration of the trust.
If the settlor is not resident in Belize during a tax year, none of the beneficiaries are resident in Belize during that year, and the trust does not own property located in Belize, exemptions include the following:
- the income of the trust for that year in accordance with the provisions of the Income Tax Act;
- no estate, inheritance, succession or gift tax or duty is payable as related to the trust property in case of any death occurring during that year;
- no stamp duty is payable on all instruments executed in that year as related to transactions carried out by the trustee on behalf of the trust or to the trust property.
For the Exchange Control Regulations, 1976, with regard to the property of the trust and transactions carried out by the trustee on behalf of it, a trustee of an exempt trust is considered non-resident.