Belize is a country located in Central America bordered by Mexico to the north, Guatemala to the west, and the Caribbean Sea to the east. It is a former British colony and became independent in 1981. As a former British colony, its legal system is modelled on the common law of England. Its International Trust Law is governed by the Belize Trusts Act.
A Belize International Trust (also called a “Belize Offshore Trust”) offers very strong asset protection from creditors and lawsuits. In this article, I discuss some of the benefits of using a Belize International Trust to protect your assets compared to other offshore jurisdictions.
1. Immediate asset protection
A Belize International Trust provides immediate asset protection once you have transferred assets into the trust. Other jurisdictions have a one or two year limitation period from the date that the assets were transferred to the trust to be safe from fraudulent conveyance claims.
Belize excludes their fraudulent conveyance laws from applying to international trusts. This means that as long as the trust was created for a lawful purpose, the Belize courts will not consider any fraudulent conveyance claims against the trust.
2. Belize International Trusts are immune from Mareva injunctions.
A Mareva injunction is where a court grants an order to a plaintiff freezing a defendant’s assets, (usually worldwide), until the lawsuit is finally determined. If a plaintiff / creditor here in Canada were to obtain a Mareva injunction from a Canadian court, they would then have to have that order recognized and enforced in the jurisdiction where your assets are located.
The Supreme Court of Belize has ruled that the asset protection provisions in the Belize Trusts Act prelude Belize courts from issuing a Mareva Injuntion against a trust formed in Belize.
3. Confidentiality
The Register of trusts in Belize is not open for public inspection. Furthermore, the Belize Trusts Act, prohibits the Registrar of International Trusts from disclosing or sharing any information about the settlors or beneficiaries of the trust or the trusts assets, without the written authorization of the trustee.
4. No “21-year rule”
In Canada, family trusts created during someone’s lifetime are deemed to dispose of their property every 21 years. This can result in capital gains liability. In Belize, the duration of a trust can be up to 120 years from the date of establishment of the trust.
5. Belize does not enforce foreign judgements
Section 7(6) of the Belize Trusts Act states:
Where a trust is created under the law of Belize, the Court shall not vary it or set it aside or recognise the validity of any claim against the trust property pursuant to the law of another jurisdiction or the order of a court of another jurisdiction in respect to –
(a) the personal and proprietary consequences of marriage or the termination of marriage;
(b) succession rights (whether testate or intestate) including the fixed shares of spouses or relatives; or
(c) the claims of creditors in an insolvency.
6. Belize is a stable economic jurisdiction
Unlike other offshore “tax haven” jurisdictions Belize has a stable economic climate based on oil, tourism and a vibrant real estate market. It has no foreign exchange controls. It has its own central bank and its own currency pegged to the $ US dollar with several large international banks and a solid domestic banking sector. This makes it less risky as a jurisdiction to do business in.
In addition, the Government of Belize imposes no income taxes, no gift tax, and no estate taxes on a Belize International Trust.
Summary
No offshore jurisdiction is perfect. Nor does “one size fit all” in terms of where to establish an Offshore Asset Protection Trust. However, given its close proximity to Canada, and the high degree of asset protection that it provides to its International Trusts, Belize is regarded as one of the best offshore jurisdictions for Canadians to establish an Asset Protection Trust.
If you would like more information about establishing a Belize International Trust click here