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Information provided by Peter A.S. Pearman, Conyers Dill & Pearman Clarendon House, Church Street, P O Box HM 666, Hamilton HM CX, Bermuda Tel: +1 441 295 1422, Fax: +1 441 292 4720, e-mail: [email protected]

1. Trust of Bermuda the court shall not vary it the trust for the purposes of this or set it aside pursuant to the laws of subsection; There has been no new legislation directly another jurisdiction in respect of: related to the law of trusts or trustees, (b) the settlor unless the trust instrument although the Proceeds of Crime (a) the personal and proprietary effects provides otherwise; Amendment Act 2000 ("PCAA") (dealt of marriage; (c) a trustee of the trust; with below) and the Taxes Management (b) succession rights, testate and (d) any other person whom the court Amendment Act 1999 ("TMAA") will come intestate, especially the indefeasible considers has sufficient interest in the into effect on I st June 2001. shares of spouses and relatives; and enforcement of the trust and, where It has been proposed that changes to the (c) the protection of creditors in matters the Attorney General satisfies the Trust Companies Act will be forthcoming, of insolvency; court that there is no such person ...

although the scope of such changes is yet Downloaded from https://academic.oup.com/tandt/article/7/6/16/1688801 by guest on 29 September 2021 unless the law of Bermuda has then the Attorney General may make to be determined. In light of the KPMG corresponding laws or public policy rules." application for the enforcement of Report it may be that other changes to the trust." trust legislation will be made but the This provision is self explanatory, but specifics are yet to be determined. essentially provides that foreign forced 6. Tracing of trust assets J heirship claims will not be entertained 2. Anti-money laundering unless there are similar provisions under The position is the same as in and Bermuda law. to the effect that a beneficiary would The Proceeds of Crime Act 1997 ("PCA") have a first charge on the assets that were and in conjunction therewith the Proceeds 4. Protectors traceable, however; the ability to trace may of Crime (Money Laundering) Regulations end if no product of the trust can be found, There are no specific legislative provisions 1998 (the "Legislation"), comprise or if it is found, it is a bona fide purchaser dealing with protectors, but they are a Bermuda's anti-money laundering legislation. for value without notice or if the defence of common feature incorporated into (a) While there is no reporting innocent change of position is raised. Bermuda trusts.The flexibility of the requirement to any governmental protector allows for successive persons to body, upon accepting the 7. Attacking trusts be granted certain powers or powers of appointment as trustee of any new consent under the trust instrument which The situation would be similar to that in trust, under the legislation, the England and Wales and, as such, actions as trustees are required to conduct would otherwise lapse upon the death of against the trust assets rather than against sufficient due diligence in order to the settlor (if such powers were to be the trustees are very limited unless: ensure (i) they know who the client is, reserved by the settlor). and (ii) the source of funds. The actions of a protector in relation to the (a) the trustee has the power under the trust deed to, and does, grant a (b) As regards the administration of trust would be classified as fiduciary in charge over the trust assets; or existing trusts, and the continuing nature if the purpose of such action was administration of new trusts, the the protection of another person's (b) the creditor has some other sort of trustees are required to be aware of interest(s). A protector will normally be proprietary interest in the trust the various transactions and if granted the power to hire and fire trustees, assets, otherwise the action must be 'suspicious activity' (as defined in the agree trustee fees and be required to brought against the trustee. legislation) becomes apparent, the consent to the inclusion and exclusion of Reporting Officer of the trustee is beneficiaries. Such powers or consents can 8. Quasi-trusts required to make a specified report be expanded or contracted to fit the There is no provision for the establishment of the suspicious activity to the circumstances. of foundations in Bermuda and their Financial Investigations Unit of the recognition in Bermuda would probably Bermuda Police, who liaise with the 5. Purpose trusts turn on compliance with the relevant National Anti-Money Laundering Pursuant to Part II of the Trusts (Special requirements under the jurisdiction in which Committee. Provisions) Act 1989, as amended, non- they were created. It should be noted that the recently passed charitable purpose trusts can be established PCAA and the TMAA will jointly bring fiscal in Bermuda.The law relating to purpose 9. Conflict offences within the ambit of a relevant trusts was substantially amended in 1998 in The Trusts (Special Provisions) Act 1989, as offence. order to clarify certain perceived amended, provides some guidance on the Trust companies fall within the definition of ambiguities. governing law of trusts and in general this is "Regulated Institutions" for the purposes of Pursuant to s 12B of the Trusts (Special determined by the instrument creating the the legislation. Provisions) Act 1989, as amended, "The trust. In the absence of specific provisions, Supreme Court may make such order as it the courts would look to several issues ie, 3. Forced heirship considers expedient for the enforcement of (a) the place of administration, (b) the situs Section I I of the Trusts (Special Provisions) a on the application of any of of trust assets, (c) residence of the trustees Act, 1989, as amended, provides that, the following persons: and (d) the objects of the trust. Such "Where a trust is validly created under the (a) any person appointed by or under legislation also provides that the ability to

16 Trusts & Trustees ; World Survey j May 2001 Bermuda

change the governing law should be name of another person; and communications, either by way of indicating provided for in the text of the document (b) constructive trusts, when equity that the sender intended to sign or creating the trust, but any purported determines that it is the duty of one otherwise adopt the information change will only be valid if the new person to hold property for another transmitted (where there is no legal governing law recognises the validity of the person.The position is generally the requirement for a signature to be affixed) trusts and the respective interests of the same as in England and Wales. or by way of an accredited certificate beneficiaries. issued by a third party which is associated 14. Taxation with the information transmitted (whether 10. Succession or not any legal requirement for affixing a (i) There is no in signature exists). While no specific The trust must be properly constituted Bermuda. reference is made to the formation and prior to the death of the settlor and the (ii) No, as there is no income tax in administration of trusts, there is no assets properly divested from the name of Bermuda, there is no Bermuda particular reason why the provisions of this the settlor into the name(s) of the trustee. income tax charge to a settlor on the Act should not apply to trusts and their trust income. administration. 11. Trustees' powers of Downloaded from https://academic.oup.com/tandt/article/7/6/16/1688801 by guest on 29 September 2021 (iii) No, as there is no income tax in investment Bermuda, there is no Bermuda 17. OECD and FATF position The statutory powers of investment are income tax charge to a beneficiary Bermuda signed a commitment letter to the contained in PartV of The Trustee Act, whether in receipt of income or not OECD dedicating itself to complying with 1975, as amended by the Trustee (iv) There is no ad valorem stamp duty to measures ensuring Bermuda does not have Amendment 1999.The Amendment Act trusts which receive or do a "systematic harmful tax regime." By 2005, essentially provides that subject to any transactions not in local currency Bermuda will: contrary intention in the trust deed, assets. (i) enter into effective exchange of trustees have wide, flexible, modern There is stamp duty applicable, in certain information treaties or tax matters investment powers. Section 55(a)(3) circumstances, to trusts holding local with governments who are members provides that, "A trustee may acquire any Bermuda currency or local assets. of the OECD; type of investment whether or not income producing." In exercising the investment (ii) increase fiscal transparency of power under s55(a)(3),"A trustee shall act 15. Fraudulent preference companies; and as a prudent investor would, by considering doctrine (iii) adopt measures dealing with the purposes, terms, distribution The of Elizabeth does not apply in preferential tax treatment for requirements and other circumstances of Bermuda. However; a fraudulent conveyance businesses which have no substantial the trust and by exercising reasonable care, statute is found in the Conveyance Act activity in Bermuda. skill and caution." No further changes to the 1983, s37, which essentially followed the Bermuda is not listed as a FATF non- investment powers of trustees are terms of the UK Law of Property Act 1925; cooperative jurisdiction and has undergone contemplated. s37 provides, inter alia, as follows,"... every much scrutiny. As per recent OECD conveyance of property, made whether reports, Bermuda "appears to have effective 12. Trading trusts before or after the appointed day, with regulations and supervision for financial Limitation of liability clauses, limiting the intent to defraud creditors, shall be voidable institutions and an efficient mandatory liability to the value of the trust fund, ought at the instance of any person thereby reporting system for suspicious to be included in all contracts, although with prejudiced.'The onus of proving the intent transactions." Bermuda will continue to Private Trustee Companies this liability to defraud is on those who seek to modify its legislation to maintain OECD would be limited to the $ 12,000 share impeach the trust. compliance, but with a view to maintaining capital if such clause was seen to be appropriate safeguards for the rights of insufficient. 16. e-commerce customers and confidence in its regulatory systems. Where the trading activities take place Bermuda passed the Electronic Transactions through an underlying company, the Act 1999 (the "Act") which took effect on trustees as shareholders have certain 4th October 1999. The Act is consistent 18. Transparency and obligations to enquire into the management with the UNCITRAL Model law on e- exchange of information of such companies, however; such commerce.The Act is expressed to apply There is no registry of trusts in Bermuda. obligations can be reduced to a certain to all forms of electronic communication extent by the terms of the trust instrument. culminating in an obligation, except for wills, 19. Regulation of trust other testamentary instruments or the companies 1. Constructive and/or transfer of an interest in land. Information implied trusts transmitted electronically (eg, data files) will The Trust Companies Act 1991 (the "Act") be treated as if it were in writing, and this requires a reasonable level of regulation of There are no specific provisions creating applies equally to information actually trust companies carrying out business in or implied or constructive trusts, but implied contained in a transmission as it does to from within Bermuda. Section 5 of the Act trusts would comprise inter alia: information incorporated into a requires a public trust company to apply (a) resulting trusts when beneficial transmission by reference to another and pay a fee to the Minister of Finance interests are not properly disposed of transmission or document. Electronic (the "Minister") for a license to operate or when property is bought in the signatures may be affixed to electronic trust business providing details of the nature

Trusts & Trustees ; World Survey ; May 2001 17 Bermuda and scale of the proposed trust business Bermuda government is proposing a variety any of their "delegable functions" to a third and any further information required by the of amendments to the Act, however; for the party or co-trustee. Section 15B provides Minister: most part it is understood that these will that a "delegable function" includes deal with the authorities to regulate and The Bermuda Monetary Authority (the functions of an administrative or managerial license rather than substantive changes to "BMA") is charged with the responsibility of nature, which includes discretionary supervising trust companies in accordance the way trust companies operate. investment powers. However; the same with the powers and duties conferred on it section goes on to provide that certain by the Act.The BMA is obliged to report 20. Delegation functions are not delegable ie, formulation any information brought to its attention Subject to the overriding powers and terms of investment policy or criteria, the exercise about the trust business of the company to of the trust, the Trustee Act permits wide the Minister modern powers of investment and of dispositive powers, powers to change Pursuant to the KPMG Report, the delegation. By s 15A trustees may delegate beneficiaries etc. Downloaded from https://academic.oup.com/tandt/article/7/6/16/1688801 by guest on 29 September 2021

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18 Trusts & Trustees World Survey May 200 Ij