Trusts and statutory regimes under Belize law

Belize's Trusts Act sets out how trusts may be created, the purposes they may serve, and the roles of trustees, beneficiaries, and protectors.

Trust forms and creation

The Act defines a trust as property held by a trustee for a beneficiary, a valid purpose, or both. Beneficiaries may be identifiable, or may not yet be ascertained or in existence. Purpose trusts may serve charitable purposes or other purposes.^[1]

A trust other than a unit trust may be created by oral declaration, written instrument, conduct, operation of law, or another manner. The settlor's intention to create a trust must be clearly shown, though the Act requires no formalities or technical expressions for creation. A unit trust requires a written instrument.^[1]

The Act permits trusts to be revoked or varied where their terms so provide. It also allows trust terms to confer on a trustee or another person power to appoint trust property or an interest in it to a person or a valid charitable or non-charitable purpose.^[1]

Beneficiaries, purposes, and protectors

A beneficiary may be named or identified through a relationship, description, or class. Trust terms may allow a beneficiary to be added or excluded, and may make a benefit conditional on an obligation. The settlor may also serve in the role of trustee or protector, and may be a beneficiary.^[1]

The Act recognizes charitable purposes including poverty relief, education, religion, environmental protection, human rights, and other purposes beneficial to the community. A purpose qualifies as charitable only when its fulfilment benefits the community or a substantial section of it. It may be carried out in Belize or elsewhere.^[1]

A non-charitable purpose trust may be created when its purpose is specific and reasonable, as well as capable of fulfilment, and meets the Act's stated legal conditions. Its terms must provide for a protector capable of enforcing the trust and a successor to that protector. The protector's functions and powers may be set by the Act or trust terms. The protector may also be the settlor or a beneficiary, and may serve as trustee.^[1]

Belize legislation settles whether a trust stays valid when the settlor keeps powers. It does not settle the U.S. result. A power to revoke, to direct distributions back to the settlor, or to veto trustee decisions can make the trust a grantor trust under sections 671 to 679. In that case the settlor is taxed on the trust's income and files Form 3520, and the trust files Form 3520-A. The legal effect of retained control depends on the governing law and the facts.

Trustee responsibilities and statutory arrangements

A person with legal capacity under Belize law to own and transfer property may serve as trustee. Trustees administer the trust under the Act and its terms, and owe fiduciary duties to beneficiaries or class members, as well as to the trust purpose.^[1]

Trust terms may require a trustee to consult another person or obtain that person's consent before exercising functions. Subject to the trust terms, trustees generally act together, though the terms may permit individual or majority action or delegation. For charitable trusts, trustee functions may be exercised when more than half of the trustees agree, subject to the Act's qualifications.^[1]

The Act also sets rules for maintenance and advancement when property is held for a beneficiary. For a minor, a trustee may apply income toward maintenance or education, or for the minor's benefit, and must accumulate the residue as trust property, subject to authority to use accumulations as current income. For accumulation and maintenance settlements, these provisions apply unless the trust terms say otherwise.^[1]

Duration and international trusts

The Act sets a maximum duration of 120 years from a trust's creation, with termination on its 120th anniversary unless terminated earlier. The duration limit does not apply to trusts established exclusively for charitable purposes. Trust terms may direct or authorize accumulation of all or part of trust income for a period no longer than the maximum trust duration.^[1]

For trusts subject to the duration section, the Act disapplies the rule against perpetuities. It defines an international or offshore trust through statutory conditions concerning the settlor's and beneficiaries' residence, the location of trust property, and the selected proper law. For a purpose trust, the definition also considers where its purpose is pursued.^[1]

An international trust may be created only by written instrument. A deed of settlement must be signed by the settlor and trustees, while a declaration of trust must be signed by the trustees. The Act separately provides for registration of international trusts.^[1]

Belize Trusts Act, Chapter 202

The Act has eleven Parts and two Schedules. Parts I to IV cover preliminary rules, trust purposes, and trustees' responsibilities and authority. Interpretation provisions define terms used across the Act, including beneficiary, settlor, trust, trustee, and trust property.^[1]

Schedule I lists authorised trustee investments where the Act uses that term, and Schedule II sets out implied trustee powers under section 33.^[1]

Other provisions address ending or varying a trust and consequences of breach. Court provisions include jurisdiction, applications for directions, and orders concerning trust administration.^[1] Part X contains the international trust definition described above.

Questions and answers

Can a Belize trust be created orally?

A trust other than a unit trust may be created by oral declaration or through other means specified by the Act. A unit trust must be created by written instrument.^[1]

What charitable purposes does the Act recognize?

The Act lists poverty relief, education, religion, environmental protection, human rights, and other purposes beneficial to the community. To qualify as charitable, the purpose must benefit the community or a substantial section of it.^[1]

How does the Act describe a non-charitable purpose trust?

Its purpose must be specific and reasonable, as well as capable of fulfilment, among other stated conditions. The terms must provide for a protector capable of enforcing the trust and a successor protector.^[1]

How long may a trust last under the Act?

The general maximum is 120 years from creation, and the trust ends on its 120th anniversary unless it ends sooner. The duration subsection does not apply to a trust established exclusively for charitable purposes.^[1]

May a Belize trust accumulate income?

The trust terms may direct or authorize accumulation of all or part of income for a period within the maximum duration. For a minor beneficiary, the trustee accumulates the residue of income after any permitted application. Income accumulation remains subject to the statutory rule for applying accumulations.^[1]

What written formalities apply to an international trust?

The Act requires an international trust to be created by written instrument. A deed of settlement is signed by the settlor and trustees, and a declaration of trust is signed by the trustees.^[1]

Related glossary terms

Trust: The Hague Convention describes a trust as a relationship in which a settlor places assets under a trustee's control for beneficiaries or a specified purpose.
Recognition of a trust: The Hague Convention describes recognition of a trust, its minimum legal effects, and limits tied to applicable law. Jersey law also addresses recognition.
Trustee: A trustee controls trust assets and manages, uses, or disposes of them for beneficiaries or a stated purpose under the trust terms and applicable law.