KGN specializes in Seychelles Trust Formation.
Seychelles – General Information
Location: Archipelago in the Indian Ocean, northeast of Madagascar.
Area: total: 455 sq km, land: 455 sq km, water: 0 sq km.
Natural resources: Fish, coconuts (copra), cinnamon trees.
Population: 93,920 (July 2017 est.).
Time Zone: UTC+4.
Languages: Seychellois Creole (official) 89.1%, English (official) 5.1%, French (official) 0.7%, other 3.8%, unspecified 1.4% (2010 est.).
Government type: Presidential republic.
Legal system: Mixed legal system of English common law, French civil law, and customary law.
International organization participation: ACP, AfDB, AOSIS, AU, C, CD, COMESA, EITI (candidate country), FAO, G-77, IAEA, IBRD, ICAO, ICC (NGOs), ICCt, ICRM, IDA, IFAD, IFC, IFRCS, ILO, IMF, IMO, InOC, Interpol, IOC, IOM, IPU, ISO (correspondent), ITU, MIGA, NAM, OIF, OPCW, SADC, UN, UNCTAD, UNESCO, UNIDO, UNWTO, UPU, WCO, WHO, WIPO, WMO, WTO (observer).
Economy: Since independence in 1976, per capita output in this Indian Ocean archipelago has expanded to roughly seven times the pre-independence, near-subsistence level, moving the island into the high income group of countries. Growth has been led by the tourist sector, which directly employs about 26% of the labor force and directly and indirectly accounts for more than 55% of GDP, and by tuna fishing. In recent years, the government has encouraged foreign investment to upgrade hotels and tourism industry services. At the same time, the government has moved to reduce the dependence on tourism by promoting the development of the offshore financial, information, and communication sectors, and renewable energy.
As a very small open economy dependent on tourism, Seychelles remains vulnerable to developments such as economic downturns in countries that supply tourists, natural disasters, and changes in local climatic conditions and ocean temperature. One of the main challenges facing the government is implementing strategies that will increase Seychelles’ long-term resilience to climate change without weakening economic growth.
Currency: Seychelles rupee (SCR).
The Basics and Advantages
A trust is created when a legal entity or an individual (known as the Settlor) transfers the legal ownership and management of assets (known as Trust Property) to another person or entity (the Trustee). Usually, the trustee is mandated with ensuring that the trust property generates some value to other persons (known as beneficiaries).
A trust is usually guided by terms and conditions provided for in the trust deed as well as trust legislations of the jurisdiction in which it is being established. So, with that in mind, let us shift focus to a particular jurisdiction – the Seychelles. Offshore trusts have become very popular globally and more so in the Seychelles.
What Is A Seychelles Trust?
Simply put, a Seychelles trust is a trust established in the Seychelles. In case you are wondering why Seychelles trusts are arguably the most popular globally then, a brief history of the same might give you some insight. The government of Seychelles drafted the Seychelles International Trusts Act of 1994 after conducting a series of very thorough researches in other top trust jurisdictions.
As a result, the law became arguably the best trust legislation in the world. In 2011, it was amended by the International Trusts (Amendment) Act of 2011. Even better terms were introduced to protect and safeguard the interests of settlors, beneficiaries and their trust property. Therefore, the act provides legitimate means by which people and entities can protect their assets against high taxes, the risk of confiscation, personal liability, and exchange controls.
What You Need To Know About Seychelles Trusts
Before we delve into the benefits, it is essential that you get some basic Seychelles trust formation. For instance, under the Seychelles International Trusts Act of 1994, you cannot be a Seychelles trust settlor if you reside in the country. In addition to that, trust property should not include any property situated within the Seychelles. Other key features of Seychelles trusts are:
- The trust is superior to the civil property rights in the sense that despite the fact that the trustee is recognized as the legal owner of the trust property in question, any proceeds and benefits are to be enjoyed by the beneficiaries. That is a contrast to the civil property rights that gives property owners the liberty to enjoy all the benefits that arise from the property; unless they choose the transfer the benefits.
- Although trusts are irrevocable by default, both revocable and irrevocable trusts are permitted.
- There is a provision for a protector. In a trust agreement, a protector is a person or entity whose responsibility is to supervise the trustee on behalf of the settlor.
- A trust duration of up to 100 years.
- Charitable trusts are not subject to perpetuity rules.
- The right to accumulate income for any amount of time as long as the trust duration is still valid
- The settlor has the right to leave before his death. In such a case, he can specify in the trust deed how he wishes his trust to be administered.
Advantages of a Seychelles Trust
Now that you know the key Seychelles trust features, it is time to proceed to benefits. This section explains the advantages of a Seychelles trust with more emphasis on the settlor and beneficiary.
#1: Asset protection
Under the Seychelles International Trusts Act of 1994, when a settlor transfers assets to a trust, the assets are no longer considered to be part of his estate. That means they will remain intact even in the event of the settlor’s liquidation or bankruptcy.
#2: Tax exemption
The act exempts Seychelles trusts from taxation on capital gains, income, assets, inheritance, gifts and stamp duties. That gives a trust the liberty to be a tax-free means of accumulating and preserving wealth.
#3: 100-year duration
A Seychelles trust may continue for up to 100 years from the day on which it was started. That duration is sufficient to accumulate wealth and even redistribute it to heirs or other persons/entities of choice.
#4: Simple registration process
The formation process of a Seychelles trust is very simple and straightforward relative to the process of other jurisdictions. Furthermore, it is not costly at all and you are less likely to feel any financial pinch by the time the process is complete.
#5: Ideal trust jurisdiction
From geographical and cultural perspectives, the Seychelles is located very perfectly for trusts that seek to explore the Afro-Asian international markets for business or any other purpose.
#6: Privacy and discretion
The Seychelles International Trusts Act of 1994 holds that the identities of settlors and beneficiaries should not be disclosed under any circumstances unless there is a court order from the Seychelles Supreme Court. Therefore, a trust is usually kept away from public scrutiny unless it is under investigation for crimes like money laundering, human trafficking or drug trade among other serious crimes.
Trusts are allowed to migrate to and from the Seychelles. That means a trust from let’s say Jersey or Mauritius can migrate to Seychelles and one that was originally based in Seychelles can migrate to Jersey or Mauritius. This is important because it enhances flexibility as far as the jurisdiction of operation is concerned.
#8: Presence of trustees
As a hub for major trust activities, Seychelles plays host to some of the best trustees in the world. They offer premier financial services under the Financial Services Authority of Seychelles.
#9: Probate avoidance
The Seychelles International Trusts Act protects a trust against probate in the event that its settlor dies. In most other jurisdictions, his estate would be subjected to a lengthy and costly probate procedure that would interrupt the trust’s operations and compromise its continuity.
#10: No forced heirship
Apart from protection against probate, the act also protects trusts from being passed down to heirs out rightly. This is very important for a settlor who wants to decide who should inherit the estate rather than let the next-of-kin assume automatic ownership.
As you can see, a Seychelles trust comes with so many benefits; all of which are guaranteed by the Seychelles law. There is no doubt that the country provides one of the friendliest environment for trusts in the world and thus it should not come as a surprise that most settlors actually view it as a premier location for trusts.
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