Bermuda has long been a leader in the business of setting up private trusts, which can be a valuable tax, asset protection and estate-planning tool. Bermuda’s trust laws are modelled after British trusts legislation. Purpose trusts differ from private ones in that they do not have an ascertainable beneficiary or beneficiaries. Rather, they are established for a specific purpose, either charitable or non-charitable. Business visitors may have more interest in the non-charitable purpose trust, which is often set up for a commercial use, such as to insulate a company from a particular transaction.
In that way, bankruptcy remoteness can be achieved, and an “off-balance-sheet” transaction can be enabled. The Trusts (Regulation of Trust Business) Act 2001 prohibits the carrying on of trust business in or from within Bermuda unless the trustee is licensed or exempt. Increasingly popular is the Private Trust Company, which is exempt from such regulation provided it meets two criteria: it does not offer its services to the general public, and it is empowered to act as trustee of only a limited number of identifiable trusts that would typically be for the benefit of related persons, or family members.