1. How long have trusts been used by private investors, as a vehicle for their asset planning?
2. How are trusts set up and are they registered and open to public scrutiny?
3. Are trusts used for domestic purposes or are they purely for international investors?
4. Can trusts be used to hold the shares in companies registered in the same jurisdiction, especially shares in international business companies or similar zero-taxed vehicles; if so, what are the advantages of doing so?
5. Are there specific advantages of using international trusts to assist in overcoming forced heirship provisions of the jurisdiction of the person that is setting up the trust?
6. What advantages are there in using international trusts as a part of a tax planning regime?
7. What are the particular advantages of using international trusts to protect against creditors?
8. Can trusts be used to protect beneficiaries from their disabilities or extravagance?
9. Can trusts be used to treat income and capital of trust assets in different ways?
10. Can trusts be used to avoid the need to obtain a Grant of Probate on the death of the settlor and in other ways to be used as a substitute for a Will?
11. Is the setting up of a trust and the contents and details of the trust instrument confidential? What limits are there on this confidentiality?
12. What ancillary services are available in a jurisdiction relevant to an international trust operation, such as international banks, trustee services, investment advisers?
13. Is it necessary that a trust set up in the jurisdiction must be managed there or may the trustees comprise individuals or companies situated elsewhere?
14. May the settlor retain the power to decide on the investment of trust assets, the identification of beneficiaries or the allocation of assets to such beneficiaries? What are the consequences of exceeding this?
15. What particular markets are attracted to trusts in the jurisdiction?
16. Who is the person in the jurisdiction with whom the details of the advantages of setting up a trust may be discussed and who should be instructed to set one up?
17. Who is usually engaged to draft the trust instrument; is it a lawyer in that jurisdiction, a standard form from a trust company or similar persons in the country of residence of the settlor, or by a service provider in the jurisdiction?
18. What is the nature of trustees available in the jurisdiction; are they trust companies belonging to banks, associates of law firms, independent trust companies or branches or subsidiaries of international trustee companies?
19. In setting up a trust in the jurisdiction by a foreign settlor, what KYC procedures are required in respect of the settlor, trustees and beneficiaries, and what other anti-money laundering laws are applicable?
20. What is the minimum amount of cash or assets which are recommended to make the expenses of setting up and managing a trust worthwhile?
21. Before an investor elects to set up a trust, he might consider the advantages of alternative arrangements. What advantages are there in these; for example, joint bank accounts, private foundations, insurance or some form of corporate structure or a straightforward power of appointment or an outright gift)?
22. What is the duty of the adviser to ensure that the client understands the nature of the proposed trust and what procedures are adopted generally to ensure that the settlor understands the nature of a trust?
23. What measures are there to combat the abuse of trusts set up to conceal assets, particularly in respect of fraudulent activities or tax evasion by the settlor?
24. Are purpose trusts possible in the jurisdiction and, if so, what are their principal applications?
25. Can creditors attack trust assets directly instead of taking action against the trustees and what measures have been enacted to frustrate action taken by “trust busters”?
26. What procedures are recommended to be followed by trustees to minimise their risk (such as maintaining accurate minutes of meetings and file notes of telephone conversations)?
27. Are professional indemnity insurance policies easily available to trustees and is it the current practice for these to be taken out?
28. What are the obligations on trustees to disclose trust information and to whom would this duty be owed?
29. What is the position relating to trusts engaging in trade or other commercial activities (and is it usual for such activities to be conducted through a company whose shares are held in trust)?
30. What procedures are adopted by banks before setting up a bank account for a trust (references, anti-money laundering procedures etc.,)?
31. Are trustees required to follow any legal provisions relating to the maintenance of trust assets or finance or is the limit to their authority only as may be contained in the trust instrument or by the protector/guardian?
32. Does a trust have to produce annual accounts and, if so, to whom are copies of these accounts routinely supplied?
33. Are there adequate investment advisers and stock exchange and other facilities available for investing trust funds in the jurisdiction where there are liquid assets of the equivalent of $5 million?
34. What reporting requirements are required of trustees in respect of a trust’s financial position which are required to be made to the Regulator, to the settlor or to any other party?
35. Many trusts are now integral parts of more complex arrangements known as ‘Family Offices’. What is the principal use of trusts in such arrangements?
36. What is the status of the jurisdiction in respect of requirements of the OECD on Exchange of Information, the FATF in respect of anti-money laundering laws and the IMF in respect of international banking standards?
37. What are the advantages of the jurisdiction which are marketed to various sectors of the world to encourage their HNWIs to locate their wealth through trusts?
38. Where the trust is discretionary, what procedures should a settlor and beneficiaries expect that the trustees should follow before making a distribution?
39. Where the trust is discretionary and the trustees are not geographically close to the beneficiaries, what procedures are recommended to enable the trustees to have adequate knowledge of the beneficiaries to exercise their discretion properly to fulfil the terms of the trust?
40. Beneficiaries may from time to time approach trustees requesting a distribution in their favour. How are such requests to be handled, bearing in mind the duties of a trustee are to act in a manner fairly between all the beneficiaries where the trust is discretionary?
41. Settlors may contact the trustees requesting that some of “their” trust fund be used in a particular way. How are such demands met?
42. Where a trustee is incompatible with the beneficiaries, may a trustee seek to be relieved of his responsibilities?
43. What rights do beneficiaries have to receive accounts and other information concerning the trust and who else might be included within these rights?
1. Is there any specific legislation which legitimises the retention of any powers by the settlor?
No.
2. What limits are there on the legitimacy of a Letter of Wishes and how are such instruments properly created and used?
Trustees may have regard to a Letter of Wishes in exercising any functions conferred upon them by the terms of the trust but shall not be accountable in any way for their failure or refusal to have regard to that letter. Besides, no fiduciary duty or obligation shall be imposed on a trustee merely by the giving to him of a Letter of Wishes. There is no specific legal provision regarding the creation of a Letter of Wishes.
3. What have been the latest developments in trust law and regulation in the jurisdiction and what changes are planned or expected?
No latest development in trust law and regulation and no changes are planned or expected.
4. Are private trust companies a feature of trusts in the jurisdiction and are there firms or organisations who could host such a private trust company?
Yes.
5. Are there any particular laws relating to the setting up of a private trust company? If so, are there any precautions which should be taken to ensure that the trust remains valid?
There are no particular laws relating to the setting up of a private trust company but the Financial Services Commission laid down certain conditions applicable to private trust companies.
6. If the majority of trustees are resident outside the jurisdiction, is it necessary to have one of them, or an agent, resident in the jurisdiction?
Trusts set up under the Trusts Act 2001 must have at least one “qualified trustee” (defined as a management company or such other person resident in Mauritius as may be authorised by the Financial Services Commission to provide trusteeship services).
7. Once a trust is set up, what access can the public or government, local or foreign, have to details of the parties involved in the trust or trust assets under OECD Exchange of Information agreements, double taxation treaties or mutual assistance agreements? Is information revealed to foreign tax authorities automatically or solely in response to enquiries properly made under these international agreements?
A. Subject to paragraphs B & C, a trustee shall, on receipt of a request, provide accurate information as to the state and amount of the trust property and the conduct of the trust administration -
(a) to the court;
(b) to the settlor, the enforcer, or the protector of the trust, unless the trustee has reason to
believe that such person is making the request under duress;
(c) where the terms of the trust so authorise –
(i) to any beneficiary of the trust of full age who has legal capacity and having a vested interest in the trust;
(ii) to any charity for the benefit of which the trust was established.
B. Except where ordered by the court or a Judge in Chambers for a reason specified in paragraph C, a trustee shall keep as confidential and shall not be required to disclose to any person not legally entitled to it under paragraph A, or be required to produce or divulge to any court, tribunal, committee of enquiry or other authority in Mauritius or elsewhere, any information or document in his possession or under his control relating to -
(a) the state and amount or any other details of the trust property;
(b) the conduct of the trust administration;
(c) the trustee's deliberations as to the manner in which a power or a discretion was exercised, or a duty conferred or imposed by the law or by the terms of the trust was performed;
(d) the reason for any particular exercise of such power or discretion or performance of duty or the material upon which such reason will be or might have been based; or
(e) the exercise or proposed exercise of such power or discretion or the performance or proposed performance of such duty.
C. Notwithstanding any other enactment, the court or the Judge in Chambers shall not make an order for disclosure or production of any confidential information referred to in paragraph B except on the application of the Director of Public Prosecutions and on proof beyond reasonable doubt that the confidential information is bona fide required for the purpose of any enquiry or trial into or relative to (a) the trafficking of narcotics and dangerous drugs and to the proceeds of such trafficking, contrary to the Dangerous Drugs Act, arms trafficking or economic crime and money laundering under the Financial Intelligence and Anti- Money Laundering Act, (b) any act done, otherwise than in Mauritius which, if done in Mauritius, would have constituted an offence of trafficking or economic crime and money laundering under the Financial Intelligence and Anti-Money Laundering Act .
D. However, paragraphs A-C are without prejudice to (a) the obligations of Mauritius under any international treaty, convention or agreement, and to the obligations of any public sector agency under any international arrangement or concordat, (b) such disclosure as is necessary for the purpose of administering the Trusts Act and the Financial Services Act 2007, or of discharging a function under such enactments.
E. Information may be revealed to foreign tax authorities solely in response to enquiries properly made under these international agreements.
8. What are the main types of trusts and their particular uses (for example, interest in possession, discretionary or accumulation and maintenance trusts)?
Protective or spendthrift trust – the terms of a protective or spendthrift trust may make the interest of a beneficiary subject to (a) termination; (b) restriction on alienation of or dealing in that interest or any part of that interest; (c) diminution, suspension or termination, in the event of the beneficiary becoming insolvent or any of his property becoming liable to seizure or sequestration for the benefit of his creditors and such trust shall be known for the purposes of the Trusts Act 2001 as a protective or spendthrift trust.
Purpose trust – a trust may be created for a purpose, notwithstanding the absence of any beneficiary.
Charitable trust – a trust shall be deemed to be charitable where the trust has as its exclusive purpose or object one or more of the following: (a) the relief of poverty; (b) the advancement of education; (c) the advancement of religion; (d) the protection of the environment; (e) the advancement of human rights and fundamental freedoms; (f) any other purpose beneficial to the public in general.
9. Can any type of assets be placed in a trust (examples should be given of types of assets which may be included which are in addition to the normal range of cash, securities and land)?
Any type of assets may be placed in a trust and includes movable and immovable property, wherever situated, rights and interests in the property whether vested, continent, defeasible or future.
It is noteworthy that the transfer or vesting of an immovable property situated in Mauritius upon a trust of which a beneficial interest is held by a non-citizen shall be void and of no effect unless approved by the Prime Minister under the Non-Citizens (Property Restriction) Act. In addition, the transfer or vesting on a non-charitable purpose trust of immovable property situated in Mauritius shall be void and of no effect.
10. What are the formal requirements which are required such as certainty of intention of subject matter and of objects?
An instrument creating a trust shall be void unless it states (a) the name of the trustee; (b) the intention of the settlor to create a trust, or the declaration of the trustee that he holds property on trust; (c) the object of the trust, the beneficiaries or class of beneficiaries, as the case may be; (d) the property transferred or held on trust; and (e) the duration of the trust.
11. Following the previous question, are shams a danger in the jurisdiction and what are the consequences of an arrangement being declared a sham?
Sham trusts are considered a danger and are likely to be treated as being void.
12. What is necessary to make a trust properly constituted, i.e., to make it active after the trust instrument has been signed; that is, to make the trust properly constituted? What are the consequences of this is not fulfilled?
The requirements mentioned in the answer to question 10 must all be met, otherwise the trust would not have been constituted under the laws of Mauritius.
13. Can trusts be set up by a declaration by the settlor that he henceforth holds assets which he already owns on trust for someone else, hence becoming the trustee, or is it necessary that there should be a transfer of the settlors’ assets to the trustee accompanied by a written instrument by which the trustee undertakes to hold the assets for the beneficiaries?
A trust may be set up by a declaration by the settlor that he henceforth holds assets which he already owns on trust for someone else, hence becoming the trustee so long as such declaration unequivocally states (a) the name of the trustee (who will be the settlor); (b) the intention of the settlor to create a trust, or the declaration of the trustee that he holds property on trust; (c) the object of the trust, the beneficiaries or class of beneficiaries, as the case may be; (d) the property transferred or held on trust; and (e) the duration of the trust.
14. What powers are implied under the trust legislation to trustees and what powers need to be, and usually are, expressed in the trust instrument?
Implied powers:
- Trustee has all the powers of a beneficial owner.
- Trustee may consult professional persons in relation to the affairs of the trust.
- Trustee may, without the consent of any beneficiary, appropriate trust property in or towards satisfaction of the interest of a beneficiary in such manner and in accordance with such valuation as he thinks fit.
- Trustee may advance or apply for the benefit of a beneficiary part of the trust property prior to the date of the event upon the happening of which the beneficiary becomes entitled absolutely to the property.
- Trustee has power to hold the trust property, or part of the trust property which is subject of a revocation, as the case may be, in trust for the settlor absolutely or, if he is dead, for his heirs and succession as if it had formed part of his estate at the time of his death.
Powers that need to be expressed in the trust instrument:
- Delegation of functions by the trustee
- Power on the settlor, trustees or any other person to appoint all or any part of the trust-property or any interest in it, to or for the benefit of, any person (whether or not a beneficiary of the trust immediately prior to the appointment or assignment).
- Authority of the trustee to invest trust property in securities and investments with or without conditions or restrictions.
15. Can a settlor be appointed a trustee?
Yes.
16. Can a settlor be made a beneficiary?
Yes, but he may not be the sole beneficiary of the trust.
17. Are Protectors/Guardians usually incorporated into trusts in the jurisdiction; if so, what are the specific rules relating to them and, if none, how does the general law treat them?
Yes; unless otherwise provided in the terms of the trust, the protector shall have the power (a) to remove a trustee and to appoint a new or additional trustee; (b) to determine the law of which jurisdiction shall be the proper law of the trust; (c) to change the forum of administration of the trust; (d) to withhold consent from specified actions of the trustees either conditionally or unconditionally.
18. Do protectors/guardians have fiduciary responsibilities?
A protector/ guardian exercising any of the powers set out in the preceding paragraph shall not by reason only of the exercise of the power be deemed to be a trustee, and unless otherwise provided under the terms of the trust, shall not be liable to the beneficiaries or the trustees for the bona fide exercise of the power.
19. To what extent do beneficiaries have any control over the trustees or over their appointment or dismissal?
Beneficiaries do not have any direct control over the trustees or over their appointment or dismissal but may however apply to court for an order in respect of the appointment or the removal of trustees.
20. Can beneficiaries indicate to the trustees how they wish the trust to be managed or may they terminate the trust when the law relating to such termination is fulfilled (such as under Saunders v Vautier)?
Beneficiaries may, through a Letter of Wishes, indicate to the trustees how they wish the trust to be managed, but the trustees shall not be accountable in any way for their failure or refusal to have regard to that letter. Furthermore, the beneficiaries may terminate the trust when the law relating to such termination is fulfilled.
21. What is the standard of care required under the law for trustees and what measures exist to ensure an appropriate level of performance?
A trustee should in the exercise of his functions, observe the utmost good faith and act (a) with due diligence; (b) with care and prudence; and (c) to the best of his ability and skill.
No specific measures exist to ensure appropriate level of performance.
22. If a trustee fails to take an appropriate measure, what powers are there to correct the error which may be taken by the trustees, (e.g., by agreement with the beneficiaries) or with the consent of the court, e.g., ...............................................................?
On the application of any person having an interest in the trust (i.e., the Attorney-General, a trustee, a settlor, an enforcer, a protector, a beneficiary of the relevant trust, any person empowered by the terms of the trust to make such application, or any other person with leave of the court), the court may make an order, inter alia, in respect of the execution, administration or enforcement of a trust or any trust property, including an order as to the vesting, preservation, application, surrender or recovery thereof.
23. If the trustees fail to fulfil the general terms of their duties or the particular requirements in the trust instrument, what action may be taken by the settlor or by the trustees particularly with regard to the possible need for cross-frontier negotiation or litigation?
Please refer to answer to question 22.
24. What are the limits that trustees may claim indemnity for costs and expenses of running the trust and opposing outside claims and is any procedure advisable before engaging in litigation (such as a Beddoe application)?
No limits have been set in relation to indemnity for costs and expenses of running the trust and opposing outside claims. It is advisable to make a Beddoe application before engaging in litigation.
25. Are the assets of a trust held by trustees considered in law to be separate from the trustee’s personal assets and thereby insulated from claims against the trustees personal creditors?
Yes.
26. On transfer of assets to the trustees, the settlor must arrange for the legal title of the assets to be transferred and undertake whatever transfer procedures are required by the place in which the assets are situated; if this transfer does not take place entirely as proposed when the trust is set up, does this affect the validity of the trust?
No, a trust also exists where the trustee is deemed to hold or have vested in him, property of the trust.
27. What duty of care and other criteria are applied to the investment of trust funds? Can this duty be delegated by the trustees?
Unless otherwise provided by the terms of the trust, a trustee may delegate the management of trust property to, and appoint, investment managers whom the trustee reasonably considers to be competent and qualified to manage the investment of the trust property.
A trustee shall not be liable for any loss to the trust arising from such a delegation or appointment or from the default of any such delegate or appointee where the trustee exercised the standard of care of a reasonable and prudent man of business in the selection of the delegate or appointee and the supervision of the activities of the delegate or appointee.
28. Can trusts migrate into or out of the jurisdiction and may they change their proper law?
Yes.
29. Is the jurisdiction governed by the Hague Convention on the Recognition and Enforcement of Trusts and, if not, to what extent are foreign trusts recognised?
Mauritius is not party to the Hague Convention on the Recognition and Enforcement of Trusts. Foreign trusts are recognised under the laws of Mauritius but shall not be enforceable in Mauritius to the extent that (a) it purports to do anything which under the law of Mauritius is an offence, (b) it confers or imposes any right or function the exercise or discharge of which under the law of Mauritius is an offence; (c) it is immoral or contrary to public policy; or (d) it purports to apply directly to immovable property situated in Mauritius.
30. What powers are there for beneficiaries to seek replacement of trustees?
Beneficiaries may apply to the court seeking replacement of trustees.
31. How are vacancies as trustees filled and what is the normal number of trustees who are appointed to a fixed interest or discretionary trust?
Any person having an interest in the trust (i.e., the Attorney-General, a trustee, a settlor, an enforcer, a protector, a beneficiary of the relevant trust, any person empowered by the terms of the trust to make such application, or any other person with leave of the court) may apply to the court for filling a trustee vacancy. The number of trustees to a fixed interest or discretionary trust is normally one.
32. Under the law, what criteria are applied to persons licensed to deal with international trusts to determine whether they are ‘Fit and Proper’ persons to undertake this work according to the law?
In considering whether a person is a fit and proper person the Financial Services Commission may have regard to –
(a) in relation to the person and, where the person is a corporation, the officers and beneficial owners of the corporation –
(i) financial standing;
(ii) relevant education, qualifications and experience;
(iii) ability to perform the relevant functions properly, efficiently, honestly and fairly; and
(iv) reputation, character, financial integrity and reliability;
(b) any matter relating to –
(i) any person who is or is to be employed by, or associated with, the person;
(ii) any agent or representative of the person;
(iii) where the person is a corporation, the officers and any shareholder of the corporation, the related corporations of the corporation and the officers of those related corporations.
