Beautiful Virgin Islands

Tuesday, Oct 14, 2025

Why consider a British Virgin Islands or Cayman trust for wealth protection?

Why consider a British Virgin Islands or Cayman trust for wealth protection?

We are all familiar with the platitudes about trusts: great things if used right, offering potential solutions to asset protection, probate, tax and family issues. The concept of moving the legal ownership of an asset to an unrelated party while still retaining the benefit of it is useful in many contexts.
We are seeing trusts growing increasingly popular in non-traditional regions such as Asia and Latin America, where clients may take some getting used to the idea. Discussing trusts with clients can be daunting-a trust is not a set legal entity and is endlessly bespoke.

The most common but also most misunderstood type of trust is the “bare trust”, aka nomineeship. These are usually very short documents, simply requiring the trustee to act on the instructions of the beneficial owner. Because they are often headed “Declaration of Trust”, clients and their advisers can believe they have all the benefits of a substantive trust, but they do not. Because the trustee has no substantive powers or discretions, they often do not avoid probate on the death of the beneficial owners, and are usually see-through with no asset protection. We find that even many lawyers can be unaware of these issues, so it is good to check the document if in doubt.

Substantive (non-bare) trusts-if drafted and run responsibly-will however have all the advantages associated with trusts. They can be categorised in the following ways and are in most cases “mix and match”, so one can have a VISTA purpose trust for example.

• Which governing law to use? A popular choice are the British Virgin Islands (“BVI”) and Cayman Islands. Both British Overseas Territories, they both have thriving trusts industries with lawyers and judges from central London practice. They use mainstream common law and allow interaction with their other famous entities-BVI companies, Cayman funds-minimising the need for two sets of lawyers on every transaction. Both allow non-resident trustees to act as trustee (subject to some constraints) although if a resident trustee is needed, both are also tax-neutral.

• Should the trust be for beneficiaries or purposes or both? Most trusts are for the benefit of the settlor’s family and perhaps their favourite charities. However, trusts can be purely for purposes (rather than for persons). Some trust jurisdictions such as England allow only charitable purposes but others such as BVI and Cayman allow non charitable purposes, for example to hold the shares of a private trust company or orphan vehicle. A trust settled under Cayman STAR legislation allows a mix of beneficiaries and purposes which are often drafted in the form of a family business plan.

• Should the trustee have discretion over distributions? Traditionally, many trusts had fixed interests, for example, “The income to my wife for her lifetime”. Nowadays, however, the typical new trust will allow full discretion to the trustee, meaning that, for example, no divorcing spouse can argue the beneficiary has a right to assets. A non-binding letter written by the settlor can give the client reassurance that the trustee will in usual circumstances follow their wishes.

• Should the trustee have discretion over the investment of the trust fund? Traditionally, “Yes”, but in these days of corporate trustees maybe “No”, particularly where the trust holds a treasured, but unprofitable family business, or an unusual asset which a conservative trustee might otherwise feel obliged to sell. Most trust regimes allow some form of bespoke reservation of investment powers back to the settlor but only one, the BVI VISTA trust, has put it in statute. When the trustee is also given discretion over distributions, such trusts do not remove asset protection and are therefore very popular.

• Should the trust take effect in lifetime or after death? It comes as a surprise to some clients that trusts can be declared in Wills (essentially a very long Will). Although these obviously require probate to be settled first, they are the ultimate solution for a settlor who wishes to maintain full control in his lifetime, but who does not want his empire split up by his children after his death.

Another element in all of this is the Protector, a bespoke role available in many offshore trust jurisdictions. They can be the client’s relative or advisor. They act as a check on the trustee. Their roles range from a single ability to, say, appoint a successor trustees, to wide ranging powers or consents over distributions. Although a client will always prefer giving powers to their protector friend instead of an unknown corporate trustee, courts are wary of over-powerful protectors so one should always ask “does the Protector really need this power?“
Newsletter

Related Articles

Beautiful Virgin Islands
0:00
0:00
Close
Ex-Microsoft Engineer Confirms Famous Windows XP Key Was Leaked Corporate License, Not a Hack
China’s lesson for the US: it takes more than chips to win the AI race
Australia Faces Demographic Risk as Fertility Falls to Record Low
California County Reinstates Mask Mandate in Health Facilities as Respiratory Illness Risk Rises
Israel and Hamas Agree to First Phase of Trump-Brokered Gaza Truce, Hostages to Be Freed
French Political Turmoil Elevates Marine Le Pen as Rassemblement National Poised for Power
China Unveils Sweeping Rare Earth Export Controls to Shield ‘National Security’
The Davos Set in Decline: Why the World Economic Forum’s Power Must Be Challenged
France: Less Than a Month After His Appointment, the New French Prime Minister Resigns
Hungarian Prime Minister Viktor Orbán stated that Hungary will not adopt the euro because the European Union is falling apart.
Sarah Mullally Becomes First Woman Appointed Archbishop of Canterbury
Mayor in western Germany in intensive care after stabbing
Australian government pays Deloitte nearly half a million dollars for a report built on fabricated quotes, fake citations, and AI-generated nonsense.
US Prosecutors Gained Legal Approval to Hack Telegram Servers
Macron Faces Intensifying Pressure to Resign or Trigger New Elections Amid France’s Political Turmoil
Standard Chartered Names Roberto Hoornweg as Sole Head of Corporate & Investment Banking
UK Asylum Housing Firm Faces Backlash Over £187 Million Profits and Poor Living Conditions
UK Police Crack Major Gang in Smuggling of up to 40,000 Stolen Phones to China
BYD’s UK Sales Soar Nearly Nine-Fold, Making Britain Its Biggest Market Outside China
Trump Proposes Farm Bailout from Tariff Revenues Amid Backlash from Other Industries
FIFA Accuses Malaysia of Forging Citizenship Documents, Suspends Seven Footballers
Latvia to Bar Tourist and Occasional Buses to Russia and Belarus Until 2026
A Dollar Coin Featuring Trump’s Portrait Expected to Be Issued Next Year
Australia Orders X to Block Murder Videos, Citing Online Safety and Public Exposure
Three Scientists Awarded Nobel Prize in Medicine for Discovery of Immune Self-Tolerance Mechanism
OpenAI and AMD Forge Landmark AI-Chip Alliance with Equity Option
Munich Airport Reopens After Second Drone Shutdown
France Names New Government Amid Political Crisis
Trump Stands Firm in Shutdown Showdown and Declares War on Drug Cartels — Turning Crisis into Opportunity
Surge of U.S. Billionaires Transforms London’s Peninsula Apartments into Ultra-Luxury Stronghold
Pro Europe and Anti-War Babiš Poised to Return to Power After Czech Parliamentary Vote
Jeff Bezos Calls AI Surge a ‘Good’ Bubble, Urges Focus on Lasting Innovation
Japan’s Ruling Party Chooses Sanae Takaichi, Clearing Path to First Female Prime Minister
Sean ‘Diddy’ Combs Sentenced to Fifty Months in Prison Following Prostitution Conviction
Taylor Swift’s ‘Showgirl’ Launch Extends Billion-Dollar Empire
Trump Administration Launches “TrumpRx” Plan to Enable Direct Drug Sales at Deep Discounts
Trump Announces Intention to Impose 100 Percent Tariff on Foreign-Made Films
Altman Says GPT-5 Already Outpaces Him, Warns AI Could Automate 40% of Work
Singapore and Hong Kong Vie to Dominate Asia’s Rising Gold Trade
Trump Organization Teams with Saudi Developer on $1 Billion Trump Plaza in Jeddah
Manhattan Sees Surge in Office-to-Housing Conversions, Highest Since 2008
Switzerland and U.S. Issue Joint Assurance Against Currency Manipulation
Electronic Arts to Be Taken Private in Historic $55 Billion Buyout
Thomas Jacob Sanford Named as Suspect in Deadly Michigan Church Shooting and Arson
Russian Research Vessel 'Yantar' Tracked Mapping Europe’s Subsea Cables, Raising Security Alarms
New York Man Arrested After On-Air Confession to 2017 Parents’ Murders
U.S. Defense Chief Orders Sudden Summit of Hundreds of Generals and Admirals
Global Cruise Industry Posts Dramatic Comeback with 34.6 Million Passengers in 2024
Trump Claims FBI Planted 274 Agents at Capitol Riot, Citing Unverified Reports
India: Internet Suspended in Bareilly Amid Communal Clashes Between Muslims and Hindus
×