Best Offshore Countries to Set Up a Trust

Whether you want to set up a trust for asset protection or to look after your disabled loved one via a special needs trust, knowing the best countries to set up a trust is essential. With the correct knowledge, you can take advantage of numerous benefits, plan your taxes, and manage your wealth effectively across generations.

If you are looking to start your offshore trust, this blog guides you through the list of the best countries for offshore trusts. Let’s dive in and learn about what makes each nation special.

Best Offshore Trust Jurisdictions

Here’s some quick information about the best trust jurisdictions that you can opt for:

1. Cook Islands

The Cook Islands is one of the best countries to set up a trust. Offshore trusts in the Cook Islands are governed by the International Trust Act 1984. The island nation boasts numerous advantages that make forming a trust here a wise choice.

To begin with, there is no restriction on foreign ownership, and anyone can set up a trust in the Cook Islands. Moreover, there are no restrictions on the length of time a trust can exist; thus, a Cook Islands trust can exist indefinitely. Aside from this, the law also pegs the default years as 100 for the trusts that have not defined years in the trust instrument.

Another significant advantage is the firewall protection against creditors, which makes it one of the best offshore trust jurisdictions. Section 13e of the International Trusts Act 1984 illustrates that the Cook Islands court does not recognize foreign judgments and may choose not to enforce them. However, the catch here is the location of the assets. The assets located on different soil but under the name of the trust can still have local laws applied to them. Meaning, the local government of the jurisdiction where the assets are physically present can seize, or the court can issue a turnover order.

Aside from the above, the spendthrift clause is another primary section that makes the Cook Islands one of the best countries to set up the trust.

Section 13f prevents the beneficiary from selling or pledging the assets of the trust as collateral. The income earned from these assets will also remain under the control of the beneficiaries. On top of that, Section 13a of the act allows you to add a special clause in the trust instrument that protects the assets even when the settlor goes bankrupt.

Another significant advantage that makes the Cook Islands one of the best offshore trust jurisdictions is the choice of governing law. The International Trust Act 1984, section 13g, gives you the option to choose the governing law for your entire trust. Moreover, you can also choose Cook Islands law to govern certain aspects of the trust while selecting another law to govern another aspect of the trust.

2. St. Kitts And Nevis

St. Kitts and Nevis is another of the best trust jurisdictions. While the St. Kitts and Nevis is a single federation, the laws that govern the trust in each are different. Nevis is known for its international trust regime, whereas St. Kitts offers a more traditional domestic trust regime.

The international trusts in Nevis are governed by the Nevis International Exempt Trust Ordinance (NIETO), whereas the ones in St. Kitts come under the Trusts Act. There is a clear demarcation between the benefits that both the regions offer.

Like the Cook Islands, the trust formed in Nevis can also exist for an indefinite time period, allowing you to build a system that can last for centuries. However, the domestic trusts in St. Kitts can only exist for up to 100 years.

Another essential feature that makes Nevis the best country to set up a trust is the bankruptcy clause.

Section 73 of the NIETO states that even in the case of bankruptcy, the assets held by the trust will remain protected under the law. However, there are a few exceptions to this rule. First, at the time of the transfer, you must not be rendered insolvent in your home country; otherwise, the transfer will be deemed fraudulent. Second, if the creditors can prove that the money was moved to keep it from them, then the court can reverse the transfer. Third, under the strict anti-money laundering policy, if the settlor is convicted of the crime and the assets are the proceeds of that crime, then the trust can be deemed void.

The trust in St. Kitts and Nevis provides ironclad protection from the creditors through the requirement of the statutory bond. As per the country’s legal framework, the statutory bond is a mandatory security deposit of US$100,000 that any creditor must post with the Ministry of Finance before they can initiate legal action or proceedings against the property of an international trust.

Moreover, Nevis trust formation requires at least one resident trustee or a licensed Nevis trust company to ensure that the trust remains grounded in the local rules and regulations.

3. Cayman Islands

The Cayman Islands is the gold standard among the best offshore trust jurisdictions. The STAR trust, which is unique to the islands, sets the jurisdiction apart. It is a special trust alternative regime that allows you to completely separate the benefit of the trust from the right to enforce it. Unlike traditional trusts, where beneficiaries can sue the trustee or demand information, in the STAR trust, only a designated enforcer has these rights.

Another significant benefit that makes the Cayman Islands one of the best countries to set up a trust is the absence of a perpetuity period. Historically, the Cayman trusts were limited to 150 years. However, under the Perpetuities (Amendment) Act, 2024, new Cayman trusts can now exist indefinitely. Additionally, it must be noted that if you own land in the Cayman Islands, the 150-year rule may still apply. Moreover, the country has a 6-year seasoning during which creditors can challenge the asset transfer.

Another thing that sets the Cayman Islands as one of the best countries to set up a trust is the specific rights given to the settlor, such as the ability to act as a director or officer of any company wholly or partly owned by the trust, to change the governing law, and so on.

4. Belize

Belize is one of the best countries to set up a trust because of numerous reasons. Unlike the Cayman Islands, where the seasoning period is 6 years before the assets legally belong to the trust, a Belize trust provides immediate asset protection with no seasoning period. However, it is not absolute as Belize applies fraudulent transfer rules, and a trust can be set aside if it was made under undue influence or through fraudulent activities.

Another critical point that makes Belize one of the best countries for offshore trusts is that there is no time limit to cease the trust’s existence. A Belize charitable trust can exist for an unlimited period. However, non-charitable trusts set up in Belize still have a 120-year time limit.

When it comes to creditors, the country provides firewall protection just like the other jurisdictions. Meaning, it does not recognize the court judgments of other countries. Thus, your assets remain protected in Belize. For any significant impact, the creditor would have to visit Belize, hire a local lawyer, and file the case in the country’s courts. All of the above benefits make Belize one of the best offshore trust jurisdictions.

5. Seychelles

Seychelles is another top country to set up a trust. Trusts in seychelles are governed by the Seychelles Trust Act 2021. The law bestows numerous powers on the settlor, making setting up a trust in this jurisdiction a viable option. The power includes the ability to act as a director or officer of any company wholly or partly owned by the trust, change the governing law of the trust, and so on.

What makes it a top offshore trust jurisdiction is that there is only a 2-year window for creditors to challenge the asset transfer to the trust. Once this window passes, courts in Seychelles consider your asset transfer legal and unvoidable.

Moreover, there is total tax neutrality for international trusts in the country, provided the income is earned abroad. Thus, the country does not levy income tax on foreign earnings, capital gains tax, inheritance or gift tax, or stamp duty.

Another essential factor that makes it a best trust jurisdiction is that, unlike many traditional jurisdictions that require trusts to end after certain years, a Seychelles trust can now exist for an indefinite period. Thus, making it a multi-generational wealth-planning tool that can manage your wealth across generations.

6. The British Virgin Islands

The British Virgin Islands is one of the best countries to set up a trust. BVI VISTA (Virgin Islands Special Trust Act) is a unique form of trust available in the region. Through it, you can choose to block the interference of the trustee. Moreover, through it, you can place your company’s shares in the trust and still enjoy complete power over the operations.

Another significant advantage that makes the British Virgin Islands a top offshore trust jurisdiction is the strong firewall protection. Your assets remain safe from creditors' intrusion as it prevents foreign court judgements from taking hold. Moreover, the country provides a strong shield against divorce settlements as well.

On top of that, it is one of the best countries to set up a trust for efficient multi-generational wealth planning. A trust in the BVI can be set up for up to 360 years without any forced dissolution or termination. Additionally, charitable trusts can be set up for an indefinite period.

On top of that, the country provides a tax-neutral environment for trusts to operate, provided the beneficiaries are not BVI residents and the trust does not own local assets.

Important Considerations with Offshore Trusts

Regardless of their popularity, the following points must be noted before going forward with trust formation:

• Offshore trusts do not shield you from the federal government of your country.
• The income from the trust has to be reported to your country's authorities, and any related bank account must also be disclosed.
• Via information exchange treaties, countries can also share information about your earnings and tax obligations with your home country.

Choosing a suitable jurisdiction is essential to building a trust that can manage wealth across generations. We believe the above list comprises the best countries to set up a trust as they offer numerous advantages, from strong asset protection to flexibility in choosing governing law. However, you must comply with the reporting requirements of both your home country and the chosen offshore trust jurisdiction.

The process of finding the ideal jurisdiction and setting up a trust can be overwhelming, and that’s where offshore business consultants, such as Business Setup Worldwide, can be of help. Our team of experts has over 8 years of experience with trust and company formation services. We have expertise in over 50 jurisdictions and ensure that your firm meets every legal requirement. Contact us today to start your journey!