Trust forms and statutory regimes in the BVI

British Virgin Islands legislation sets out trust forms and statutory regimes. The legislation covers trustee and enforcer roles, duration rules, and income accumulation.

Trusts for people and for purposes

The Trustee Act distinguishes trusts for people from trusts for purposes. Its definition of a trust for any purpose excludes trusts for particular persons, whether immediately ascertainable or not, and trusts for an aggregate identified through personal relationships.^[1]

A purpose trust may be charitable or non-charitable. For a valid non-charitable purpose trust under the Act, the purpose must be specific, reasonable, possible, and lawful. At least one trustee must be a designated person, and the instrument must appoint an enforcer and provide for a successor. The enforcer must be a party to the instrument or give written consent addressed to the designated trustee.^[1]

The Act defines the enforcer's statutory role in a purpose trust. One person cannot serve as both trustee and enforcer of that trust. A trustee must provide the enforcer with trust accounts and copies of the trust instrument and related instruments.^[1]

The statute says charitable trusts remain governed by existing law, and an enforcer appointment for a charitable trust has no effect.

Powers reserved in the trust instrument

A trust instrument may confer specified powers on the settlor or another person without that person becoming a trustee solely by exercising those powers. The Act names a protector or nominator as possible labels, and permits powers to change the proper law, change the forum of administration, remove trustees, appoint trustees, and change who may benefit.^[1]

The statute also permits a power to withhold consent from specified trustee actions, conditionally or unconditionally. These provisions describe powers that may be written into a trust instrument; the specific terms depend on the instrument.^[1]

VISTA trusts and company shares

The Virgin Islands Special Trusts Act provides a regime that may apply where a trust instrument directs that the Act's provisions govern specified Virgin Islands shares. The trust must be created by written instrument, have at least one designated trustee, and maintain one for as long as the direction has effect.^[2]

Under the regime, the trustee holds designated shares on trust to retain them, subject to the Act's terms. The Act restricts use of share voting powers to interfere in the company's management and assigns company business and dividend decisions to its directors. Trust terms may set rules for director appointment and removal, including requiring action on a third person's or committee's decision.^[2]

Duration and accumulation

Under amendments effective in 2013, the maximum perpetuity period for trusts created on or after commencement is 360 years. The earlier maximum was 100 years.^[1]

The Act exempts a qualifying purpose trust from rules against excessive duration, including rules against perpetual trusts. The purpose trust instrument may state an event or date on which the trust ceases to be a purpose trust, and it may also set out how the trust's assets are to be disposed of at that point.^[1]

Income may be accumulated for the duration of the trust period unless the trust terms prohibit accumulation or direct or authorize it for a shorter period.

British Virgin Islands trust legislation explained

The Trustee Act is the principal general statute addressing trusts and trustees in the British Virgin Islands. It covers trustee and court powers, trust duration, governing law, purpose trusts, and charities. The separate Virgin Islands Special Trusts Act addresses trusts holding shares in companies.^[1]^[2]

The Trustee Act defines a trust as a legal relationship created when a settlor places assets under a trustee's control for a beneficiary or special purpose. The assets form a separate fund, title is held by the trustee or on the trustee's behalf, and the trustee must manage or deal with them under the trust terms and law. Reserved powers held by a settlor do not necessarily conflict with the trust's existence.^[1]

Part V lists court powers concerning trustee appointments and remuneration, vesting orders, trust variations, and dealings with trust property. Part VII addresses perpetuity periods, powers of appointment, administrative powers and accumulation of income. Part VIII covers proper law, court jurisdiction, conflict of laws, purpose trusts, trustee decision making, protectors, managing trustees, and successor trustees. Part I requires trustees to retain trust records and underlying documentation for at least five years, in a form that explains transactions and allows the trust's financial position to be determined with reasonable accuracy.^[1]

Chart of trust duration rules grouped by mechanism, labelled statute or commentary. Data table below. — Duration provisions grouped by mechanism and labelled statute or commentary; some carry commencement or transitional conditions, including BVI and Bahamas items.

Trust duration provisions and commentary by mechanism
Mechanism	Jurisdiction	Provision or form	Description	Source type
Stated duration limits and proposed changes	Guernsey	proposed amendments	Commentary on proposed amendments: they would narrow the existing 100-year limit so it applies only to trusts whose proper law was Guernsey law during a stated earlier period, and would give the court a power to extend time-limited trusts where extension is in the best interests of the beneficiaries	commentary
Stated duration limits and proposed changes	Mauritius	s. 9(1)	A trust other than a purpose trust: duration shall not exceed 99 years from coming into existence, unless earlier terminated	statute
Unlimited or indefinite duration	Cayman Islands	STAR trusts	A STAR trust may last indefinitely	commentary
Unlimited or indefinite duration	Jersey	Art. 15(1)	Unless its terms provide otherwise, a trust may continue in existence for an unlimited period	statute
Unlimited or indefinite duration	Mauritius	s. 9(2)	A purpose trust, whether charitable or not, may be of perpetual duration (as amended in 2011)	statute
Unlimited or indefinite duration	Seychelles	s. 15(1)	Unless its terms provide otherwise, a trust may continue for an indefinite period	statute
Wording on the perpetuity rule	Bahamas	Purpose Trusts Act s. 3(4)	The rule against perpetuities shall not apply to an authorised purpose trust	statute
Wording on the perpetuity rule	British Virgin Islands	Trustee Act s. 68(1), (3)	The instrument may specify a perpetuity period of a number of years not exceeding 360; that limit applies only to instruments taking effect after a stated commencement. Commentary describes a shorter maximum period for earlier BVI trusts	statute
Wording on the perpetuity rule	British Virgin Islands	purpose trusts	Commentary: purpose trusts are exempt from the rules against perpetuities, including the rule against perpetual trusts	commentary
Wording on the perpetuity rule	Jersey	Art. 15(2)	No rule against perpetuities or excessive accumulations shall apply to a trust	statute
Wording on the perpetuity rule	Seychelles	s. 15(2)	No rule against perpetuities or excessive accumulations shall apply to a trust	statute
Accumulation of income	Bahamas	Trustee Act s. 86(1)	Where a trust instrument expressly directs accumulation for a period that does not contravene the Perpetuities Act, trustees may give effect to the direction in their absolute discretion	statute
Accumulation of income	British Virgin Islands	Trustee Act s. 78	Subject to any term of the trust, income may be accumulated for the duration of the period of the trust	statute
Accumulation of income	Jersey	Art. 15(2)	No rule against excessive accumulations shall apply to a trust	statute
Accumulation of income	Mauritius	s. 10(1) and (2)	Terms may direct accumulation for a period not exceeding the maximum duration of the trust; with immovable property in Mauritius, not exceeding 25 years	statute
Accumulation of income	Seychelles	s. 15(2)	No rule against excessive accumulations shall apply to a trust	statute

Questions and answers

Can a BVI purpose trust have no individual beneficiaries?

Yes. The Trustee Act defines purpose trusts separately from trusts for particular persons or relationship-defined groups.

Who serves as enforcer of a non-charitable purpose trust?

The trust instrument must appoint an enforcer. The enforcer cannot also be a trustee of that purpose trust.^[1]

Can a settlor reserve powers under a trust instrument?

Yes. The Act allows powers to be conferred on the settlor or another person, including powers concerning trustee appointments, beneficiaries, and the trust's governing law. Exercising specified powers alone does not make that person a trustee.^[1]

How long may a BVI trust last?

For applicable dispositions, the instrument may specify a perpetuity period of up to 360 years under the statutory timing condition. A qualifying purpose trust is exempt from rules against excessive duration.^[1]

Can trust income be accumulated throughout the trust period?

The Trustee Act says income may be accumulated for the trust period. This is subject to a trust term that prohibits accumulation or sets a shorter accumulation period.^[1]

What does the VISTA statute say about trustee involvement in company management?

For designated shares, the trustee generally may not use voting or other powers to interfere in company management. The statute assigns business conduct and dividend decisions to company directors, subject to its provisions and the trust terms.^[2]

Related glossary terms

Enforcer: An enforcer is a person given a role in relation to certain trusts. Jersey and Cayman law describe how enforcers are appointed, with their duties and rights.
Settlor: A settlor is associated with creating a trust or placing property into it. Definitions describe the role through trust creation and property disposition.
Reserved powers: Reserved powers are rights a settlor keeps, or gives to another person, under a trust. Trust laws address their validity and timing, and administration.