| Question: | What is a Share Trust? |
Answer: |
A Share Trust is a custodial based trust structure that takes advantage of the Virgin Islands Special Trusts Act, 2003 ("VISTA") and enables shares in a BVI company to be automatically passed to your heirs, without the need for a public probate in the BVI. |
Question: |
How much will a Share Trust cost? |
Answer: |
A Share Trust currently costs $1,700.00 to create, with $1,000.00 maintenance fees charged annually thereafter from the date on which the Share Trust was created. Disbursement costs and expenses incurred in creating or administering the Share Trust are charged in addition. |
Question: |
How long does it take to create a Share Trust? |
Answer: |
A Share Trust can be created in little longer than the time it takes to transfer your shares to the Trustee, typically 5 working days. |
Question: |
Why was the Share Trust developed? |
Answer: |
The Share Trust was developed by Harneys in order to make it easier for individuals to plan succession to the shares they hold in BVI companies and ultimately the assets held by those BVI companies and to maintain the confidential use of BVI companies. |
Question: |
I am a lay person, which of the Share Trust guides should I read? |
Answer: |
We recommend you read the General Guide and contact one of our trust lawyers if you wish to discuss further. |
Question: |
I am a lawyer, which of the Share Trust guides should I read? |
Answer: |
We recommend you read the Detailed Guide and contact one of our trust lawyers if you wish to discuss further. |
Question: |
I am a professional wealth planner, which of the Share Trust guides should I read? |
Answer: |
We recommend you read the Wealth Planning Guide and contact one of our trust lawyers if you wish to discuss further. |
Question: |
I hold my BVI shares personally, and do not have a Will that covers my worldwide assets, why should I consider a Share Trust? |
Answer: |
In the event of your death, in order to pass title to the BVI shares your heirs will have to apply to the BVI Courts for letters of administration, and will have to demonstrate their entitlement to your estate; this will likely be a costly process and may involve significant delay. As letters of administration will be required to be filed with the BVI Courts, their content will become public.
A Share Trust will, in the event of your death, automatically transfer your BVI shares to your named beneficiaries and so avoid the need to obtain letters of administration to your estate. There is no requirement for public filing or disclosure of this process and therefore your affairs will be kept private and confidential. |
Question: |
I hold my shares personally, and have a Will that covers my worldwide assets, why should I consider a Share Trust? |
Answer: |
In the event of your death, the executor named in your Will, will have to apply to the BVI Courts in order to obtain a grant of probate to your estate. Only after a grant has been issued can your executor, in conjunction with the BVI company in question, transfer your shares to your named beneficiaries. A grant of probate is a public document in the BVI, and the contents of your Will can be viewed by members of the public.
A Share Trust will, in the event of your death, automatically transfer your shares to your named beneficiaries and so avoid the need to obtain a grant of probate in the BVI. There is no requirement for public filing or disclosure of this process and therefore your affairs will be kept private and confidential. |
Question: |
If I have a Share Trust will I also need a Will to cover my worldwide assets? |
Answer: |
No, you will not need a Will to deal with your BVI company shares if you transfer them into a Share Trust. |
Question: |
What are the typical costs of applying for probate in the BVI? |
Answer: |
Costs of obtaining probate in the BVI can range between US$6,000 and US$11,000 in a relatively simple estate. Costs will be much higher in contested estates. |
Question: |
How long does it take to obtain probate in the BVI? |
Answer: |
Probate can take between 3 - 6 months to obtain, depending on whether you die with or without a valid Will that covers your worldwide assets. Significant delays can be experienced in contested estates. |
Question: |
Is a grant of probate or letters of administration in the BVI a public document? |
Answer: |
Yes, a copy of the grant of probate or letters of administration can be obtained by members of the public. If you have a Will that deals with your worldwide assets, then a copy of this can also be obtained by members of the public. |
Question: |
I am from a foreign country, if I die why will my heirs have to apply for probate in the BVI? |
Answer: |
Because shares in a BVI company are within the jurisdiction of the BVI Courts, your heirs will first need to apply for a grant of probate or letters of administration to deal with your shares. |
Question: |
I hold my shares through a corporate nominee, why should I consider a Share Trust? |
Answer: |
In the event of your death, your corporate nominee can only transfer your shares to either your executor (if you die with a valid Will that deals with your BVI company shares) or administrator (if you die without a valid or any Will dealing with your BVI company shares).
Before they can do anything else with the shares, your executor or administrator will first need to make a public application to the BVI Courts, in order to obtain either a grant of probate or letters of administration; this can be costly and involve significant delays.
A Share Trust avoids the need to apply for a grant of probate or letters of administration as your shares will be automatically transferred to your named beneficiaries in the event of your death. Your affairs will be kept private and confidential. |
Question: |
But my nominee agreement provides that my shares will be transferred to named beneficiaries in the event of my death, is this valid? |
Answer: |
No, a nominee agreement that contains such a provision will be void and of no legal effect in the BVI.
You should urgently review all nominee agreements that contain such a provision; you may wish to discuss this further with one of our trust lawyers. |
Question: |
As an individual currently holding all the shares in my BVI company and being the current sole director of the company, the BVI Business Companies Act, 2004 allows me to appoint a "reserve director" in the event of my death. Why can't I direct my reserve director to deal with my shares after my death? |
Answer: |
Section 113(7) of the BVI Business Companies Act, 2004 permits a sole shareholder / director of a BVI Business Company to nominate a 'reserve director' in the event of their death, however section 113(7) does not authorize the reserve director to administer the deceased shareholder's estate as if they were an executor. A reserve director is not an executor and is incapable of administering the deceased's estate.
A reserve director will incur personal liabilities if they 'intermeddle' in the deceased's estate; only the deceased's BVI Court appointed executor or administrator can lawfully administer the deceased's estate. |
Question: |
What if I hold my shares jointly, do I really need a Share Trust? |
Answer: |
Joint ownership will avoid a probate application in the BVI, but not on the surviving joint owner's death. |
Question: |
Can I appoint an attorney to deal with my shares in the event of my death or mental incapacity? |
Answer: |
No, a power of attorney will cease to have effect on your death or earlier incapacity. |
Question: |
I am sole director and sole shareholder of my BVI Company; am I particularly at risk? |
Answer: |
Yes, in the event of your death two applications to the BVI Courts would need to be made, 1. to appoint a replacement director and 2. to obtain a grant or probate or letters of administration to your estate, in order that your executor or administration can deal with your shares. |
Question: |
I am considering placing my shares in trust, why should I use a Share Trust? |
Answer: |
A Share Trust is a relatively simple and inexpensive solution to estate and succession planning. A Share Trust provides certainty that named beneficiaries will, in the event of your death or incapacity, inherit the shares you own in the BVI company, it provides for the ability for you to retain control of your company, and the benefits of share ownership in a freely reversible structure. This level of flexibility is not matched by a traditional long form trusts deed, and still less by trusts that unlike the Share Trust, do not take advantage of the provisions of the Virgin Islands Special Trusts Act, 2003 ("VISTA"). |
Question: |
I am considering using a Private Trust Company to act as trustee of my family trust, why should I consider a Share Trust? |
Answer: |
In the majority of cases a Private Trust Company ("PTC") has been used as a means to control the business and activities of an underlying company, the shares of which are held by the PTC subject to the terms of a trust. By using the provisions of the Virgin Islands Special Trusts Act, 2003 ("VISTA") a Share Trust effectively avoids the need to rely on a PTC to retain control of an underlying company; the settlor is able to retain control as director of the company, without trustee interference. |
Question: |
I am a company; can I use the Share Trust? |
Answer: |
No, the Share Trust is for use by natural persons only. |
Question: |
What laws will govern my Share Trust? |
Answer: |
The Share Trust will be governed by the laws of the British Virgin Islands. |
Question: |
Can I create a Share Trust outside of the BVI? |
Answer: |
No, the Share Trust is subject to the provisions of the Virgin Islands Special Trusts Act, 2003 ("VISTA"), which is not available in any other jurisdiction. |
Question: |
What are the advantages in using a Share Trust? |
Answer: |
A Share Trust confers the following practical advantages:
1. the shares placed in the trust will be transferred to your named beneficiaries;
2. automatic succession to the office of director of the company;
3. free enjoyment of divided income by the Settlor during their lifetime;
4. retention of effective control of the company; and
5. freely reversible. |
Question: |
What are the disadvantages of using a Share Trust? |
Answer: |
A Share Trust does not as such have any disadvantages, but it is important to appreciate that the Share Trust is primarily concerned with holding shares and conferring automatic entitlements to the shares in the event of Settlor's death or incapacity, and as such does not contain complex trust and succession provisions, extensive trustees discretions or the inherit ability to avoid taxes or the claims of creditors. |
Question: |
If my shares are held in a Share Trust, what happens on my death? |
Answer: |
The shares will be transferred to your named beneficiaries in the proportions indicated by you. |
Question: |
If my shares are held in a Share Trust, what happens if I lose mental capacity? |
Answer: |
The shares will be transferred to your named beneficiaries in the proportions indicated by you. |
Question: |
How do you determine mental incapacity? |
Answer: |
Mental incapacity is determined by a joint medical report by two competent medical practitioners, each of at least 15 years standing, licensed to practice in the jurisdiction in which you are resident. |
Question: |
Can I save tax by using a Share Trust? |
Answer: |
That will depend on the tax rules in your country of residence or domicile. You will need specialist advice to confirm whether or not a Share Trust can save you tax. |
Question: |
Will I have to pay any tax in the BVI? |
Answer: |
The only tax payable on a Share Trust is US$100 Stamp Duty. Stamp Duty is paid by affixing prepaid stamps to the Share Trust, and not by a tax return. There is no other tax liability to pay in the BVI. |
Question: |
Can I create a Share Trust to shield my assets from my creditors? |
Answer: |
No, the Share Trust contains provisions that re-transfer the shares to you in the event you are made bankrupt or are subject to civil proceedings. |
Question: |
What is the process for creating a Share Trust? |
Answer: |
We recommend you read our client guide to creating a share trust |
Question: |
How long does a Share Trust last, and in what circumstances will it terminate? |
Answer: |
A Share Trust lasts for so long as you are alive and not incapacitated. A Share Trust will terminate on your death or incapacity. |
Question: |
Who will be trustee of my Share Trust, and are they regulated in the BVI? |
Answer: |
Our professional corporate trustee, Harneys Trustees Limited, will act as trustee of your Share Trust. Harneys Trustees Limited is regulated in the conduct of its trust business by the Financial Services Commission in the BVI. |
Question: |
Can I appoint someone to be co-trustee of my Share Trust? |
Answer: |
No, due to statutory restrictions contained in the Virgin Islands Special Trusts Act, 2003 ("VISTA") a Share Trust can only ever have one trustee. |
Question: |
Who can be beneficiaries of my Share Trust? |
Answer: |
You may nominate any person to be a beneficiary of a Share Trust. Where you nominate a child, you will be advised to also appoint a guardian of the child, please refer to the client guide to creating a share trust for further information. |
Question: |
Can I determine the amount of shares each beneficiary will take? |
Answer: |
Yes, you are free to determine the amount each beneficiary will take. |
Question: |
What if I want to change my beneficiaries? |
Answer: |
No, your choice of beneficiaries is fixed; if you change your mind you will need to terminate your current Share Trust, by recalling your shares, and creating a new Share Trust. |
Question: |
I live in a jurisdiction where forced heirship rules apply; can I still determine who will benefit under my Share Trust? |
Answer: |
Yes, you are able to determine who will benefit under your Share Trust. |
Question: |
Will I need legal advice in my country of domicile or residence before creating a Share Trust? |
Answer: |
Yes, in all cases you will need to obtain legal advice in your country of residence or domicile before entering into a Share Trust. |
Question: |
Can I assign my rights under the Share Trust? |
Answer: |
No, you are not able to assign your rights under a Share Trust. |
Question: |
Will my Share Trust be confidential? |
Answer: |
Yes, your Share Trust is not required to be publicly registered in the BVI. |
Question: |
My BVI Company is licensed under one or more of the following BVI statutes:
- Banks and Trust Companies Act, 1990;
- Insurance Act, 1994;
- Mutual Funds Act 1996; or
- Company Management Act 1990.
Can I still create a Share Trust? |
Answer: |
No, due to statutory restrictions contained in the Virgin Islands Special Trusts Act, 2003 ("VISTA") you will not be able to create a Share Trust. |
Question: |
Will I retain control of my company? |
Answer: |
Yes, you will remain director of your company, or have the power to nominate who will be directors. The Trustee cannot interfere in the management and control of the company. |
Question: |
Can I determine who will be the director(s) of my company in the event of my death or earlier incapacity? |
Answer: |
Yes, under the terms of the Share Trust you can determine who will be the directors in the event of your death or earlier incapacity. |
Question: |
What if I want to change directors before my death or incapacity? |
Answer: |
Yes, under the terms of the Share Trust you will have the right to change directors at any time before your death or earlier incapacity. |
Question: |
My shares are subject to a charge or other encumbrance; can I still create a Share Trust? |
Answer: |
No, your shares need to be free of charges and encumbrances before you can transfer them into a Share Trust. |
Question: |
My shares are partly paid up; can I still create a Share Trust? |
Answer: |
No, only fully paid up share can be transferred into a Share Trust. |
Question: |
Will I be able to receive dividends while my shares are held in a Share Trust? |
Answer: |
Yes, under the terms of the Share Trust you are, during your lifetime, automatically entitled to any dividend income. |
Question: |
Will I be able to vote my shares? |
Answer: |
Yes, you will, during your lifetime, be given a power of attorney to vote the shares, subject to restrictions. |
Question: |
Can I get my shares back if I need to? |
Answer: |
Yes, you are given a right to call your shares out of the Share Trust at any time and for whatever reason. |
Question: |
What if I want to get back some, but not all, of my shares? |
Answer: |
Yes, you can withdraw some of your shares from the Share Trust; you do not need to withdraw all. |
Question: |
Are there any circumstances in which my shares will be compulsorily re-transferred to me? |
Answer: |
Yes, there are two ways in which your shares will be compulsorily transferred back to you: 1. if for whatever reason the provisions of the Virgin Islands Special Trusts Act, 2003 cease to apply to the shares, and 2. if you or the company engage in activities that pose a risk to the reputation of the Trustee, such as illegal activities. |
Question: |
Can a Share Trust hold the shares of all my BVI companies? |
Answer: |
Yes, you will need to transfer your various BVI shares into a single BVI holding company, the shares of which you can then transfer into a Share Trust. |
Question: |
Can I, at a later date, add further shares to my Share Trust? |
Answer: |
No, you will need to create a new Share Trust for the shares you intended to add. |
Question: |
Can I create a Share Trust to hold shares of my non-BVI companies? |
Answer: |
Yes, but you will first need to transfer your non-BVI shares to a BVI holding company, the shares of which you can then transfer into a Share Trust. |
Question: |
If I create a Share Trust, will I need to amend my company's memorandum and articles of association? |
Answer: |
No, you will not need to amend your company's memorandum or articles of association. |
Question: |
If I create a Share Trust, will I have to change my company's registered agent / registered office? |
Answer: |
No, it will not be necessary to change your company's registered agent or registered office. |
Question: |
What if I only hold a minority stake in the company; can I still create a Share Trust? |
Answer: |
Yes, you will be able to create a Share Trust with only minority shareholding. |
Question: |
Do I have to be a director of the company to create a Share Trust? |
Answer: |
No, you only need to be a shareholder. |
Question: |
Can I see a copy of the Share Trust documentation? |
Answer: |
Yes, you will first need to complete a form of confidentiality agreement, a Model Form Confidentiality Agreement and then return to Lynadia Maduro-Maximin at lynadia.maduro-maximin@harneys.com or Gizelle Osborne-Leader at gizelle.osborne-leader@harneys.com |
Question: |
Is there a legal opinion that supports the validity of the Share Trust? |
Answer: |
Yes, please contact one of our trust lawyers to discuss further. |
Question: |
What if I have a special requirement; can I amend the Share Trust? |
Answer: |
No, the Share Trust cannot be amended. We suggest you contact one of our trust lawyers to discuss your requirements further (link to trust lawyer contact details) |
Question: |
What is "VISTA"? |
Answer: |
"VISTA" stands for Virgin Islands Special Trusts Act, 2003. Please see our Guide to VISTA Act for further information |
Question: |
What is an "Office of Director Rule"? |
Answer: |
This is special provision of the Virgin Islands Special Trusts Act, 2003 ("VISTA") which the Share Trust uses to allow the settlor to determine who will be the directors of the company, whether in the event of the settlor's death or earlier incapacity, and while the Share Trust is in existence. |
Question: |
What is the "Trust Deed" |
Answer: |
The Trust Deed is the legal document that provides for the automatic succession to the shares of the company in the event of the settlor's death or earlier incapacity. The Trust Deed also confers on the settlor the right to any divided income, and to determine the directors of the company. |
Question: |
What is the "Rights Deed" |
Answer: |
The Rights Deed is the legal document by which the settlor agrees to transfer and the Trustee agrees to receive the shares in the company subject to the conditions that 1. the settlor may recall all or some of the shares at any time, and be entitled to vote the shares on the Trustee's behalf, and 2., that the shares may be re-transferred to the settlor either on the occurrence of specified event or at the Trustee's discretion. |
Question: |
Can I discuss this further with a trust lawyer? |
Answer: |
Yes, please contact one of our trust lawyers |
