intro-image2

NEVIS TRUST

Nevis Trusts: State-of-the Art Protection and Estate Planning

A Nevis international trust provides compelling advantages, compared to domestic trusts. This makes a Nevis trust ideal for US citizens and green card holders, as well as for other nationalities seeking a flexible and protective estate planning solution:

 

The ability to be a beneficiary of a trust you set up and still have legal protection for the trust assets.Trust laws in the US and most other countries discourage the use of “self-settled trusts” for asset protection. A self-settled trust is a trust that you create, fund, and also name yourself as a beneficiary or possible beneficiary. However, Nevis law permits self-settled trusts, making it possible for the grantor of a Nevis trust to also benefit from asset protection.

Non-recognition of foreign judgments.A creditor seeking to collect a judgment against a Nevis trust must, in many cases, re-litigate the original claim in local Nevis courts after hiring local lawyers. The legal complexity and cost of such an international collection effort is likely to stop all but the most determined adversaries.

Enhanced asset protection.Nevis requires an elevated level of proof to establish that a transfer to a trust was a “fraudulent conveyance; i.e., that it had unfairly denied a creditor the ability to seize your assets. Nevis requires proof “beyond a reasonable doubt” that a transfer was fraudulent for a creditor to prevail in a fraudulent conveyance claim.

Procedural barriers to frivolous litigation.Attorneys in Nevis are prohibited from accepting cases on a contingency basis. If a creditor wishes to pursue litigation, it must be prepared to pay the lawyer out of its own pocket, usually in advance. Further, the “loser pays” rule applies—the prevailing party in litigation is entitled to recover the costs of legal representation from the loser.

Enhanced privacy.A Nevis trust can provide far greater privacy and confidentiality than a domestic trust. Since all publicly accessible records are held outside the US, your assets don’t show up in a domestic search. The only public record in Nevis is a registry of the trust’s name, date of creation, and the name of the local trustee.

 

Avoidance of possible foreign exchange controls.
Exchange controls—limits on the convertibility or movement of a national currency across internationval borders—are often imposed when a country’s national currency is falling in value. You may place yourself in a stronger position to deal with foreign exchange controls by creating an international structure that you neither own, nor control, such as a trust.

Estate planning versatility.
A Nevis international trust can be drafted to incorporate many needs. One is estate planning; a Nevis international trust can provide the same estate planning flexibility as a domestic trust. In addition, Nevis has abolished the “rule against perpetuities;” a Nevis trust can literally last forever. However, a Nevis international trust can also be drafted to defer estate planning to the domestic trust.

image2

While a Nevis APT can hold investments in its own name, more typically clients will form a “drop down” entity such as a Nevis LLC to hold its investments. The Nevis LLC provides another layer of asset protection to the structure. It also allows Fortress to appoint you as investment manager of the structure to provide greater investment flexibility and ease of use. Finally, you can gift membership interests of the LLC to your loved ones and claim valuation discounts for estate tax purposes.

A tax advisory firm with which Fortress works can file the appropriate election with the IRS for your LLC and prepare the required annual information returns for all components of your international structure.

The trustee of a Nevis trust must be an entity registered in Nevis (an IBC, LLC, or foundation), trust company, or an attorney licensed in Nevis. The choice of a trustee boils down to two options:

  • Create your own Nevis private trust company (generally an IBC or LLC), or
  • Appointing a professional trustee

Private Trust Company

A PTC is a company incorporated with the objective of acting as trustee exclusively for one particular family. The company can act as trustee for more than one family trust. The board of directors can include family members, their professional or personal advisors, and anyone else that can bring value to the board. However, it is advisable to include a professional trustee on the board to ensure the trust meets jurisdictional legal requirements.

PTCs can offer wealthy families:

  • The ability to manage, invest, and preserve their own assets.
  • An opportunity for family members to participate in their wealth management with more liability protection for the members making decisions regarding the assets.
  • Greater ability to take advantage of investment opportunities and make decisions quickly
  • Increased privacy within a group of chosen trusted people with the same interests in mind
  • The freedom to act independently without the oversight of a financial institution
  • A way to involve the next generation in wealth planning and family affairs.
The other ugly truth is that families don’t always get along or see eye

The other ugly truth is that families don’t always get along or see eye

After a consultation, Fortress will apply our multi-jurisdictional experience in global estate and trust planning to structure your PTC according to your specific requirements.

We will then provide all of the administration services you require including, management, maintenance of the company’s books and records, secretarial services, registered agent services, bookkeeping, and accounting.

Fortress can even serve on your PTC’s board to ensure compliance with local regulations regarding trust administration.

Fortress Trustee Services

Problems can arise when people form a trust and insist on controlling it themselves. In Nevis, this is most often accomplished through the formation of a private trust company. But, should the trust ever come under attack by lawsuits or creditors, a judge may order the assets in the trust be paid to the litigants. If you control the trust, all the judge has to do is order you to pay up. If you don’t, you could be held in contempt and imprisoned or fined.

The other ugly truth is that families don’t always get along or see eye to eye — especially when it comes to money. To avoid family disputes, a professional trustee can make the financial decisions and deal with any disagreements. Family members can remain neutral.

To avoid the above scenarios, many people hire trust companies, such as Fortress, to act as trustee. We are only subject to the laws of Nevis, and only have to recognize orders of its judiciary. Therefore, if a judge orders us to turn over trust assets, we wouldn’t have to recognize or act on that order. Indeed, Nevis does not recognize foreign judgments, so a creditor must file a new lawsuit in Nevis and prove its case beyond a reasonable doubt. Even if a judge orders you to instruct us to turn over the trust’s assets, we are not obligated to do so.

The rigorous licensing process for establishing a Nevis trust company is regulated by the Nevis Financial Services Authority. Fortress has met and exceeded the agency’s requirements. Each principal at Fortress Trust Ltd. has undergone an exhaustive background check and the group has gained the experience and reputation you would expect in a trustee. With Fortress as your Nevis trustee, you can be confident your assets are secure.

The other ugly truth is that families don’t always get along or see eye

The other ugly truth is that families don’t always get along or see eye

Why Have Fortress Create and Administer Your Nevis Trust?

When you engage Fortress to create and administer your Nevis international trust, you’ll receive everything you need for a state-of-the-art asset protection and estate planning entity:

  • Deed of trust optimized for your particular circumstances.
  • Letter of wishes.
  • Obtain employer ID number from the IRS.
  • Luxurious binder with all of your trust documents, as well as sample record keeping documents.
  • Assistance in funding your trust.
  • Assistance in transferring assets in to the name of your trust.
  • Review of trust by international accounting firm to ensure US tax compliance.
  • The opportunity to engage a qualified international accounting firm to prepare US tax and reporting forms for your Nevis international trust at a discounted price.
  • Peace of mind dealing with a company accustomed to the unique requirements of US clients.

Your payment covers all Nevis government fees for one year along with the right to consult with Fortress partners to answer questions relating to the proper use and operation of the entity.

If you’re interested in creating a Nevis international trust, contact us

If you’d like to know more about the Nevis trust, follow this link.

Build Up That Wall

For wealthy individuals and families, properly-formed international trusts are like a wall between the world and your assets. There’s a gate in that wall, but only you have access. Claimants, creditors, and litigators who would happily take your assets will think twice before trying to penetrate an international trust.

But not all walls are created equal. And some (especially so-called “domestic” asset protection trusts formed in the US), have crippling vulnerabilities.

The Nevis international trust is different. It’s a stronger wall, located in a jurisdiction that favors wealth preservation. A look at the history of claims against Nevis international trust is suggestive: people take one look at what they’re up against and decide to take their lawsuits elsewhere.

Where Trusts Come From & What They Look Like

Trusts have been around for over 1,000 years, since the time of the crusades. Back then, as part of their preparations before battle, English knights would assign administrators to look after their assets. In this way, they ensured the security of their offspring, regardless of whether they would themselves survive the battle.

Over time, trusts became part of British common law, and the trust concept survives to this day in almost every region that’s been subject to British rule. That means that the United States, along with 50-or-so other nations, offers traditional trusts that looks something like this:

  • A grantor puts assets in a trust.
  • A trustee manages the trust, for the benefit of…
  • A beneficiary (or beneficiaries), who receives distributions or other benefits from it.

Traditional trusts, both in the US and abroad, can offer several benefits, including:

  • Asset protection for beneficiaries other than the grantor
  • Estate planning opportunities
  • Reduction of estate taxes
  • Avoidance of probate proceedings
  • Family business continuity

For centuries, trusts were used strictly for the conveyance of property to others. But the emergence of “spendthrift” trusts (created for people who couldn’t control their spending, or who are at a high risk of being sued) marked a fundamental shift in their use. (“Spendthrift” trusts dispense allotments only when the trustee deems it in the beneficiary’s best interest. The beneficiary has no direct access to the trust’s principle assets, and neither, therefore, do their creditors.)

“Spendthrift” provisions gave trusts an asset-protecting quality that made them more attractive to individuals and families susceptible to lawsuits. As time progressed, lawyers began drafting spendthrift trusts in which the grantor could also be a beneficiary.

However, centuries of legal precedent in Great Britain held that if a grantor is also a possible beneficiary of a trust, the result is something lawyers call a “self-settled trust”—and there is little or no asset protection. The result was that spendthrift trusts simply weren’t effective in protecting a grantor’s own assets.

In the last few decades, though, a handful of offshore jurisdictions, including Nevis, modified their trust legislation to prevent creditors from seizing assets in self-settled trusts. The Nevis law also prohibits the enforcement of foreign judgments and has other innovations to prevent creditors from seizing

Nevis International Trust vs. Domestic Asset Protection Trust

In order to go after the assets owned by your Nevis trust creditors face an uphill battle. The biggest obstacle is that creditors who want to grab non-US assets owned by a Nevis international trust must file their claims in Nevis in order to gain jurisdiction over the trust. And, they’ll have the deck stacked against them from the start.

Here’s a comparison to show some advantages of the Nevis international trust. To receive these benefits, your assets must be owned by the international trust —although the assets usually will be titled in the name of a “drop down entity” the international trust owns:

IN THE US  IN NEVIS
Anyone can sue you at any time, while risking no assets of their own.Claimants must:

  • Retain a Nevis attorney, who cannot be paid on a contingency basis (they are paying legal fees from day one).

  • Post a $100,000 cash deposit, in case the defendant is awarded any counter-claims .

Claimant is awarded money if defendant is shown to be participating in “fraudulent conveyance” (e.g., moving money into a trust to avoid paying current or future creditors).Fraudulent conveyance must be proved beyond a reasonable doubt.
The grantor of a trust can be the beneficiary and still retain asset protection (only in states with DAPT laws, and judgments from other, less favorable states often enforceable in the DAPT state).Grantor can be beneficiary and will retain asset protection.
The statute of limitations is extended – transfers can be challenged as “fraudulent conveyance” for some 4-6 years after they're made.The statute of limitations is shortened – creditors must bring action within one year of a transfer.
For purposes of estate planning, grantor has limited control over how assets are distributed to heirs.For purposes of estate planning, grantor has more broad control over how assets are distributed to heirs.

In addition, Nevis international trusts are more private than their domestic counterparts. IRS reporting obligations apply, but neither they, nor the international assets they hold, show up in domestic asset tracking networks.

They’re a nice solution for people who want to conduct their affairs without everybody knowing what they’re up to. Kind of like shutting your blinds so the burglars don’t see your flat-screen TV. It’s discreet. And it’s another thing that makes the Nevis international trust a wise choice for affluent people who want to keep what’s theirs.

Who Can Benefit from a Nevis International Trust?

In order to go after the assets owned by your Nevis trust creditors face an uphill battle. The biggest obstacle is that creditors who want to grab non-US assets owned by a Nevis international trust must file their claims in Nevis in order to gain jurisdiction over the trust. And, they’ll have the deck stacked against them from the start.

Tax and Reporting Implications of a Nevis APT

Most international trusts don’t result in any tax savings to the grantor. Income from the trust is taxed as if it was earned directly by the grantor.

It’s important that you consult an experienced international tax advisor to prepare the tax and reporting forms associated with a Nevis international trust. Furthermore, your international tax advisor can advise you of your compliance requirements – i.e. what forms need to be filed – and ensure they are filed in a timely manner.

All Nevis international trusts Fortress forms come with a consultation with a qualified international tax advisor to discuss the proper structuring and reporting obligations of the trust.

If you’re interested in creating a Nevis international trust, contact us