- Trust means a legal relationship which arises where property is held by a trustee for the benefit of one or more beneficiaries.
- Trust is neither a legal entity nor an asset.
- Seychelles international trusts are governed by the International Trusts Act, 1994.
- A settlor may be resident in any country outside Seychelles. At least one trustee must be a company licensed in Seychelles as an international trustee services provider.
- Any property, including ownership interest, may be transferred into trust. A trust property may not include any property located in Seychelles.
- Trustee has all powers of owner in respect of the trust property and exercises its functions exclusively for the benefit of beneficiaries and/or for the purposes prescribed in the terms of trust.
- The terms of trust may provide appointment of a protector – a person whose consent must receive or whose advice must seek a trustee before taking certain decisions.
- Beneficiaries of a trust may be determined by name or in accordance with the terms of trust.
- A settlor of a trust may also be a beneficiary, but may not be a sole beneficiary of the trust.
- Trust is deemed to be irrevocable unless it contains an express power of revocation.
Use of Trust
- Corporate and tax planning (trust as a part of international corporate structure; trust as a vehicle for share ownership);
- Asset protection and management;
- Securing the intended way of succession;
Advantages of Trust
- Tax exemption. Income of an international trust received from sources outside Seychelles are exempt from all taxes in Seychelles.
- Confidentiality. The terms of trust are not open to public. The only document to be filed with the state Authority is a brief declaration of trust which contains no names of settlor or beneficiaries.
- A trustee may not disclose any information on settlors and beneficiaries, exercising his powers of trustee, financial position of the trust etc. otherwise than under a court decision.
- Flexibility. The terms of trust may prescribe a particular scope of powers of trustee, rights of settlor and beneficiaries, detailed regulations and restrictions on trust property management and profit distributions.
- Legal protection of settlors’ and beneficiaries’ interests. Trust property belongs neither to settlors nor to beneficiaries. A trust cannot be held invalid by reason of the settlor’s bankruptcy or liquidation (with exception to proven fact of creation of trust with intent to defraud the settlor’s creditors).
- In cases where a trust is used for inheritance of assets, the trust cannot be invalidated by any foreign rule of forced heirship, or by reason of the fact that the concept of trust is unknown to or not admitted by the law of a particular jurisdiction.
Limitations of Trust
- In countries which have controlled foreign companies’ (CFC) legislation the income of trust may be taxed at the level of its settlors or beneficiaries resident in such countries.
- The absence of the concept of trust in civil law countries (most of European states, Russia, CIS) may impede the judicial defense of interests of parties to trust relationships in such countries.