Asset protection is key, and you must know it since you are reading this article. Great start. Therefore, you must be aware of how the trust structure has been used to protect and maintain wealth throughout the generations in countries with English common law. Modern offshore trusts are used to accumulate assets, as well as protect them from legal assault. In that sense, St. Kitts and Nevis has become a preferred jurisdiction for the establishment of trusts and funds.
As you may know, our main product is the Forever Free Package, a full family office structure to protect and multiply your intergenerational wealth. A trust is the keystone of a family office, a tool that has been used by the wealthiest families worldwide to safeguard their wealth for generations to come. Why? Because when you set up a trust, your assets stop being legally yours, meaning that no angry creditor or greedy tax authority can lay their hands on it.
In order to be financially free, you mainly need freedom of movement (achievable with a second, third, and fourth passport) and asset protection (achievable through several structures of which the trust structure is the key and fundamental basis). If you want a whole asset protection strategy, we recommend our Forever Free package article which describes this in detail. A trust and second citizenship are two of the five steps needed to achieve financial freedom and probably the most vital ones. And, in both cases, Nevis is one of the best choices.
Only a few structures in the world are capable of effectively protecting an individual’s or a family’s assets against all possible dangers (from governments to ex-spouses) and our favorite one is the Nevis trust. Our main partner and sponsor at Mundo has worked with Nevis trusts for a long time, and thus we know this structure in depth and detail.
Why should you choose Nevis as your trust destination?
-Exemption from all taxes.
-Rules against perpetuities and forced heirship rules do not apply.
-A claimant must post a $25,000 bond to even start action against the trust property.
-Foreign court decisions are explicitly excluded.
-No registration requirement other than the trust and trustee names and the registered office.
-The settlor and the beneficiary can be the same person.
-The trust cannot be considered fraudulent if it’s settled up to two years after the date of the claimant’s action and, if so, the creditor must prove intent to defraud with a high burden of proof.
-The Statute of Elizabeth regarding fraudulent conveyances is excluded.
What is a Trust?
The trust is basically a structure (a contract, to be more precise) under which someone (the settlor) transfers its property or estate to a person or a company (trustee or trustee company) for the benefit of a third party (beneficiary). The trust deed will stipulate how the assets will be used and distributed for the third party’s benefit. Here are two examples of trust structures:
-A married couple has a house. When a child is born, they put this house under a trust for their child’s benefit. The trust stipulates that the house will be rented, and the profit from this rent will be saved in a fund, which will be used to pay for the child’s college when he turns 18.
-A family has different assets; let’s say these are shares and bonds. The equities are held under the trust property; thus, the dividends belong to the trust. The beneficiaries can get a loan from these dividends to receive an income. However, if one of these beneficiaries gets a divorce, the dividends coming from these securities can´t be seized if the spouse should win a divorce lawsuit. The reason is simple: the assets do not belong to the beneficiary nor the settlor (the person originally owning the assets).
Believe it or not, this simple secret has kept families wealthy for generations, protecting their wealth from creditors, governments, or irresponsible members of the family who may misuse the assets. Thus, we can perfectly understand the famous Rockefeller´s quote: own nothing, control everything. With a properly structured trust, you won’t own anything from a legal perspective but will be able to stipulate who will benefit from your assets, when, and how.
Then, an investment fund is a partnership, company, or legal entity created to gather and pool investor funds for the purpose of collective investment. Under the 2007 Nevis International Mutual Fund Regulations, the annual license renewal fee is $300 for public funds and $200 for private and professional funds. An investment trust can be registered with Nevis after January 1, 2008, according to the 2007 regulations.
Luckily, Mundo and its partners have worked with Nevis trusts and funds for many years and NTL, our main partner and sponsor, is the oldest licensed trustee company in Nevis, operating since 1994. This is known as the Nevis International Exempt Trust Ordinance of 1994, also known as NIETO. Some amendments were made in 2002 and, since then, the island has crafted modern trust regulation with leading-edge concepts. Thanks to this legislation, a Nevis trust is a highly secure structure. Not even the IRS has had the power to set aside a Nevis trust.
Advantages of a St. Kitts and Nevis Trust
Mundo prefers Nevis as a trust jurisdiction for many reasons. However, let’s mention the main ones according to our partners:
1.Protection from local courts
Rest assured if you decide to choose Nevis as a trust jurisdiction because a trust controlled by a Nevis trustee is subject to the exclusive jurisdiction of this island´s courts. A foreign court order is not valid and forced repatriation of assets is not possible. Nevis courts do not favor the granting of court orders against trusts except under truly exceptional circumstances.
On the other hand, if someone starts a legal claim in Nevis, it will not be successful as an adequately formed trust cannot be set aside by a Nevis court. Also, the claimant will have to pay high legal fees to pursue such actions. For these reasons, it is not likely that anyone will start such an enterprise against your trust.
To sum up, even if the person wins a claim in a foreign country, this judgment won’t be valid in Nevis. However, if the person wants to try the claim in Nevis’s territory, it will be costly and almost impossible to achieve. Either way, the trust still stands as an almighty protective structure. This is, of course, if it's properly settled.
A trust deed is a contract between the settlor and the trustee. For this reason, it needs to be carefully and skillfully drafted by an expert to have the maximum level of security and protection. Luckily, our partners have been drafting trust deeds for 20 years, and they know very well what they are doing.
In addition to the island’s well-founded adherence in not recognizing foreign court orders, under the Nevis International Exempt Trust Ordinance Amendment of 2009, a US$25,000 bond must be placed with the Ministry of Finance before a creditor may commence an action or proceeding against an International Trust. The creditor must establish beyond a reasonable doubt that the transfer constituted a fraudulent disposition. A Nevis APT or a disposition to the APT shall not be fraudulent if:
-Settlement, establishment, or disposition to the trust takes place 2+ years from the date the creditor's cause of action accrued, or
-Less than 2 years from the date that the creditor's cause of action accrued; the creditor fails to commence an action before the expiration for 1 year.
2. Excellent tax optimization
No taxes or exchange controls on assets/income originating outside Nevis. Yes, you have read correctly. No estate, corporate, gift, income, inheritance, withholding, succession, and stamp taxes or fees.
Nevis does not levy tax on foreign-sourced income of a Nevis trust. This means that, if you hold assets abroad such as brokerage accounts, cash, real estate, or others, as long as they are under the trust´s ownership, they won't be subject to tax. Nevis trusts are free-tax vehicles, thanks to which you can keep growing your capital endlessly. Now, we believe you can understand why we have described the Nevis trust as the king of asset protection at the beginning of this section.
3. Safe Banking
As we described in our banking section, Nevis’s banking environment is highly protective and maintains one of the highest privacy levels in the whole business world. Although they have to report under CRS to the country where the client is a tax resident, Nevis’s banks protect the client's information and won't disclose it to any potential claimants.
4. Inheritance and Estate Planning
Nevis presents the concept of dynasty trust, in which a family can hold their funds through time without limitations. Thus, instead of the traditional inheritance method, an individual can structure the trust so that the entire family can receive benefits for generations. This is an incredible tool for estate planning and inheritance management, eliminating possible disputes between family members over the inheritance.
In short, the rule against perpetuities does not apply in Nevis. Forced heirship rules are specifically excluded. The proper law is specified in the trust deed and may be Nevis’s law or the law of another jurisdiction.
5. Nevis Law Favors Asset Protection and Discretionary Trusts
In Nevis, the Trust Deed is a private document, which is not filed with the government. There’s no registration requirement other than the trust's name, name of trustee, and the registered office address.
Nevis trust legislation is considered to be among the best globally, being a leader in asset protection options. This jurisdiction can only be compared with countries such as the Cayman Islands and the Cook Islands regarding asset protection law.
There have been cases in which the IRS intended to reach the assets because the trust settlers were charged with tax evasion. All these cases have been unsuccessful thanks to the protectiveness of the Nevis trust legislation.
The Nevis courts won’t ever touch a trust. This is, of course, if the trust has been properly and skillfully established. Then, about investment funds, these may be incorporated into Nevis under the Nevis International Mutual Fund Ordinance 2004.
The trust will be safe from any possible claim and this includes them all. Ex-spouses, creditors, bankruptcy agents, disputes, forced heirship can all come to attack your assets with all their might and the assets won’t have a scratch. Thus, your wealth will remain intact for those that you selected as beneficiaries.
What Can We Do for You?
A Nevis trust becomes vital for international businesspeople and high-net-worth individuals. You would not keep your fortune under your mattress, would you? Well, these days, keeping your money in a bank is the same as keeping it in a small jar hidden in your closet. When you deposit money in your bank, you authorize them to use it for whatever purpose they want, including loans. So, the money in your bank is not real money but numbers on a system.
The bank uses your deposits and you have no security that you will get them back if there was a massive social or economic crisis. Simply, the bank does not have the necessary liquidity to answer if many people should choose to withdraw their funds simultaneously. Again, this is money under the mattress. If you really want to protect your assets, forget about the mattress and establish a trust in one of the best jurisdictions for such a purpose.
Our partner, NTL, has 27 years of experience structuring trusts and funds in Nevis. According to your needs, we can draft a tailor-made investment fund, trust deed for you, open a bank account, and an LLC for you for a special price. Our partners can also serve as your trustee.
Do you find this information interesting? Find out what our experts can tell you during a private consultation.
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