By Dr. Peter D. Maynard[1]
Over the past two decades, the Bahamas has continued to take steps to polish and update its image as a major international financial centre. These steps include the enactment of a wide array of statutes and their associated regulations, such as the Trusts (Choice of Governing Law) Act of 1989 and the Fraudulent Dispositions Act of 1991, the first of which helps resist forced heirship claims and both of which help to establish so-called asset protection trusts. Then, there are the Companies Act of 1992, the Perpetuities Act of 1995, the Mutual Funds Act of 1995, the Exempted Limited Partnership Act of 1995, the Limitation Act of 19 95, and the Securities Board Act of 1995. There are also the Securities Industry Act of 1999, a new the International Business Companies Act of 2000, and the package of other recent legislation, which discourages money laundering in The Bahamas.
Another such step is the introduction of a new comprehensive code governing trustees, the Trustee Act, 1998 (“the Act”). This article deals with some of the important provisions of this legislation. Trusts frequently own companies or international business companies as another level of confidentiality or for other reasons associated with financial or estate planning.
The old repealed Trustee Act ( Ch. 164) had been in effect since 1893. The Act came into force 27th July, 1998, and not only replaces the old Trustee Act of 1893, but also repeals the old Trustee Appointment Act as well as the Variation of Trusts Act. The Act consists of 99 sections and 2 Schedules, as compared with the 54 sections of the old Trustee Act. It is divided into seven parts: Preliminary, Investments, General Powers of Trustees and Personal Representatives, Appointment and Discharge of Trustees, Powers of Court, Special Provisions and Fiscal and Regulatory Provisions. The Schedules cover model trust provisions and list the two aforementioned repealed acts as having been repealed.
“Sham” trusts are dealt with in the well known Rahman v Chase Bank Trust Company case, where the Jersey Court held a trust to be a “sham” because the settlor retained full control over the trust assets during his lifetime. There is also a danger that such a trust could be construed as a will, and, if not executed in accordance with the Wills Act of the settlor’s country of domicile, be held invalid.
This section should adequately protect all trusts created in this jurisdiction and having their assets in this jurisdiction. Where such trusts have assets located in another jurisdiction, which is quite often the case, there is a risk that the courts of such other jurisdiction might not recognize the relationship such as a trust, but instead hold the relationship to be an entirely different legal relationship, such as a bailment, nominees or an agency.[2]
While trustees may in their discretion invest trust funds in the same manner as individual owners absolutely entitled,[3] section 5 adopts “the prudent investor rule” commonly used in the U.S.A. and some other jurisdictions.[4] Sections 4 through 12 of the Act deal with investments by trustees.
Many sections in the Act apply only when a contrary intention is not expressed in the trust instrument, in which case trustees should, where appropriate, give settlors of new trusts the opportunity to express such a contrary intention.[5]
Trustees shall not be liable for breach of trust by reason only of their continuing to hold investments which have ceased to be authorized investments.[6] They are empowered to insure against personal liabilities which they may incur in the execution of their trusts, and they may effect fidelity insurance for a person whom they employ in their capacity as trustees. The premiums for any such insurances may be paid out the capital or income of the trust property at the discretion of the trustees. However, this shall not extend to insurance against any personal liabilities which the trustees may incur to any beneficiaries as such for breach of trust or otherwise.[7]
Regarding the powers of trustees to employ agents and to delegate trusts, the power to appoint agents is quite extensive. Subsection (5) of section 30 allows trustees to recover all charges and expenses paid to agents from the capital or income of the trust fund and subsections (6) and (7) provide that: Trustees who make reasonable efforts to satisfy themselves that an agent has appropriate knowledge, experience and integrity shall not be chargeable with breach of trust or being responsible for any loss by reason only of their having appointed the agent or joined or concurred in that appointment, and trustees who have made reasonable efforts to keep themselves informed concerning the performance of an agent shall not be liable or responsible for any default or wrongful act of the agent which occurs at time when the agent appeared to the trustees to be performing honestly and competently.
A trustee may, notwithstanding any rule of law or equity to the contrary but only if expressly so permitted by the trust instrument, by power of attorney or any other written instrument delegate to any person outside The Bahamas or to any person in The Bahamas while the trustee is absent therefore the execution or exercise of all or any trusts, powers and discretions vested in him as such trustee either alone or jointly with any other person. Any delegate so appointed shall be considered an agent of the trustee for the purposes of subsections (6) and (7) of Section 30.[8]
Alienation is not presently allowed. Subsection (1) section 40 provides that, notwithstanding any rule of law or equity to the contrary, it shall be lawful for an instrument or disposition to provide that any estate or interest in any property given to any individual as beneficiary shall not during the life of that beneficiary, or such lesser period as may be specified in the instrument or disposition, be alienated or pass by bankruptcy , insolvency or liquidation or be liable to be seized, sold attached, or taken in execution by process of law and where so provided such provision shall take effect accordingly. However, neither the settlor nor any other person donating property to a trust may benefit from the provisions of Section 40.[9]
Regarding the vesting of trust property in new or continuing trustees provides that where a corporate trustee is merged or amalgamated with another corporate trustee then on the date when such merger or amalgamation takes effect all trust property held by the non-surviving trustee shall automatically and without any action on the party of either trustee vest in the surviving trustee unless the trust instrument specifically prohibits the removal of a trustee and the appointment of a new trustee or requires the consent or approval of a person and such consent or approval shall not have been obtained or such vesting would result in the abrogation of any rights, conditions, terms or provisions contained in such instrument any effectively amending such instrument.[10]
The Court may vary trusts in much the same way as it could under the repealed Variation of Trusts Act except that, unlike the latter Act which requires the applicant to prove that the proposed variation is for his benefit, the new section 70 merely provides that the Court shall not approve an arrangement on behalf of any person if carrying it out would be detrimental to that person. In the past it has quite often been difficult to show a precise benefit in every instance.[11]
Regarding purpose trusts, which have been quite popular in Bermuda and the Cayman Islands among other jurisdictions for a number or years, the main requirements are that they be for some abstract and impersonal purpose or purposes other than an exclusively charitable purpose, that it is not for the direct or indirect benefit of any particular ascertainable persons or class or persons (whether or not immediately ascertainable), that it be enforceable in the manner specified in the section by a person duly appointed to enforce it and that a designated person is a trustee of the trust. “Designated persons” include licensees under the Bank and Trust Companies Regulation Act as well as local accountants and attorneys.[12]
Regarding disclosure to beneficiaries or their right to be informed of the existence of a trust and to receive trust information and copies of trust documents, it is now well established at common law that beneficiaries of fixed or express trusts, i.e. beneficiaries with vested or contingent interests, as well as beneficiaries of discretionary trusts, because of their proprietary rights or the obligation of trustees to account to them, are entitled to be informed of the existence of the trust and to receive trust information and copies of trust documents, including accounts. Discretionary beneficiaries are not entitled to see minutes of meetings or any other documents containing the deliberations of the trustees in connection with the exercise of their discretions. Also, trustees are required to disclose existence of a discretionary power of appointment to the objects of same or to provide them with any trust information or documents as the trustees are under no obligation whatsoever to exercise such power in their favor and may choose never to do so.
While there is no objection to making disclosures to beneficiaries with vested interests and providing them with trust information and documents, there are some circumstances when it is not desirable to do so, in the case of discretionary beneficiaries or beneficiaries having contingent interests. Settlors do not always wish discretionary beneficiaries to be informed of a trust’s existence, especially when they are concerned about forced heirship rights in their own country, the class of beneficiaries is extremely broad and the settlor does not intend many of them to receive benefits under the trust or the trust is a “blind” trust with charities named but whom the settlor never intended to benefit. Section 83 seeks to help settlors in this area by providing that trustees shall be under no legal obligation to disclose the existence oft the trust to beneficiaries having no vested interest, or an interest that is contingent upon the occurrence of some event, if the trustees deem such disclosure not to be in the interest of the trust.
Furthermore, the obligation to disclose the existence of the trust to minor or mentally incapacitated beneficiaries (or their legal representatives) having vested interests is subject to the caveat that the trustees may choose not to disclose if they deem such disclosure not to be in the best interests of such beneficiaries.
The information that must be disclosed to beneficiaries having a vested interest in the trust is specifically detailed in subsection (5). In disclosing information express provision is made for preserving the right to confidentiality of the other beneficiaries. For the avoidance of doubt, subsection (8) specifically provides that the trustees shall be under no obligation to disclose to any person who is the object of a discretionary power, the existence of such power or to disclose any information concerning such power (or the trust) to any such person.
Section 83 also requires trustees to effect disclosure where the trust instrument so provides and to deny requests for information from beneficiaries having no vested or contingent interests where so required by the trust instrument. Provision is also made for the non-disclosure of documents which would reveal the deliberations of trustees and the reasons for the exercise or non-exercise of any power or discretion, the non-disclosure of memoranda or letters of wishes and for trustees not to be forced by any process of discovery to make any such disclosure.
Any attempt, by statute or otherwise, to restrict the information rights of beneficiaries could be held by a court of law to be repugnant to the original intention of settlors to confer equitable rights upon the beneficiaries and also repugnant to the trustee’s basic duty of accountability. A possible way around this might be appoint a protector to exercise or enforce such rights to information. However, this might not work as the protector could be held to have a fiduciary obligation to pass such information on to the beneficiaries. One has to wait and see how this innovative section of the Act holds up in our courts and those of other common law jurisdictions.[13]
Regarding the problem which arose as a result of the well known case of Saunders v Vautier, the rule in this case allows a beneficiary, having attained his majority and not being incapacitated, or all of the beneficiaries, being more than one and having attained their majorities and not being incapacitated, to call for the distribution of his or their share or shares in the trust even though the settlor required distribution at a later age but did not provide for a gift over in the event of the prior death of the beneficiary or beneficiaries.[14]
Trust duty is payable in the sum of $50.00 on each trust instrument instead of stamp duty.[15] Beneficiaries who are treated as non-residents for exchange control purposes are exempted from income taxes and other similar taxes on trust distributions. Where all of the beneficiaries of a trust are so treated, the trust instrument and other trust documents described in the section will be exempt from stamp duty unless the trust property includes land in The Bahamas or the trust carries on a business or trade in The Bahamas.[16]
Trust instruments and certain other trust documents are exempt from registration under the Registration of Records Act.[17] The Exchange Control Regulations Act shall apply to any settlor, grantor, donor or beneficiary who is treated as non-resident for exchange control purposes. The Act, except where otherwise expressly provided, applies to trusts, including executorship, constituted or created either before or after the commencement of the Act[18].
The Act helps to move the Bahamas to the cutting edge of innovative, international trust legislation. It dramatically improves the image and reputation of the country as an important international financial centre, and is another important reaffirmation of the country’s interest in and commitment to responsibility, clean money and good trust business. It is also a new comprehensive code governing trustees. Trustees now have codified in writing in the Act the guidance needed to deal with the full range of situations they may encounter.
[1]. Counsel and Attorney at Law, specializing in commercial law, company law, trusts, banking, and civil and criminal litigation. President of the Bahamas Bar Association and President of the Organization of Commonwealth Caribbean Bar Associations. Admitted to practice law in 1979 in England, Wales and The Bahamas; and in 1986 in St. Lucia, St. Vincent and the Grenadines, Antigua and Barbuda and Trinidad and Tobago, and in 1996, pro hac vice in the Turks and Caicos Islands. Education: McGill University (B.A., Hons.); Johns Hopkins University (M.A., Ph.D.); Cambridge University (LL.M.); Sorbonne (1966); Cornell University (1968). Member of the Hon. Society of Gray’s Inn. Former posts: Legal Adviser, Bahamas Ministry of Foreign Affairs; Economics Affairs Officer, United Nations; and Acting Stipendiary and Circuit Magistrate. Contributing Editor, Journal of Financial Crime, Journal of Money Laundering Control, Amicus Curiae, International Journal of Banking Regulation, Company Lawyer and Caribbean Law and Business. PETER D. MAYNARD & CO., Chambers, Jehovah Jireh House, Bay & Deveaux Streets, P. O. Box N-1000, Nassau, Bahamas, telephone: (242) 325-5335 , fax: (242) 325-5411, email: peter.maynard@maynardlaw.com web sites: http://firms.findlaw.com/pmaynard and http://www.geocities.com/WallStreet/Exchange/5409/bibcintro.html.
[2]. S.3 “ (1) The retention possession or acquisition by the settlor of any one or more of the matters referred to in subsection (2) shall not invalidate a trust or the trust instrument or cause a trust created inter vivos to be a testamentary trust or disposition or the trust instrument creating it to be a testamentary document.
(2) The matters referred to in subsection (1) are-
(a) any powers to revoke the trust or the trust instrument or any trusts or powers granted thereby, or to withdraw property from the trust:
(b) any powers of appointment or disposition over any trust property;
(c) any powers to amend the trust or the trust instrument;
(d) any powers to appoint, add or remove any trustees, protectors or beneficiaries;
(e) any powers to give directions to trustees in connection with the exercise of any of their powers or discretions;
(f) any provisions requiring the consent of the settlor to any act or abstention of trustees;
(g) any such other powers as are referred to in subsection (2) (a) to (h) of section 81;
(h) the appointment of the settlor as a protector of the trust;
(i) any beneficial interests of the settlor (including absolute beneficial interests) in the capital or income of the trust property or in both such capital and income; and
(j) any interests of the settlor in any companies or assets underlying the trust property and any control of the settlor over such companies or assets.
(3) Subject to any contrary intention expressed in the trust instrument and subject to its other terms, a power in a trust instrument to amend, alter or vary a trust shall include (without limitation) a power to add as beneficiaries any persons whatever (including table trusts or foundations) and to remove any beneficiaries.”
[3]. S.4 “ (1) Trustees shall have the full powers of investment and of changing investments of individual beneficial owners absolutely entitled including (without prejudice to the foregoing) –
(a) investing through nominees: and
(b) investing in or upon the security of property of any kind in any part of the world, whether or not yielding any income or involving any liability.
(2) The powers conferred by this section –
(a) shall be exercisable in the discretion of the trustees; and
(b) shall be in addition to those conferred by the trust instrument or by law.
(3) If the trust instrument was made on or after the commencement of this Act or is a written law or an instrument made under such law whenever commenced or made then the powers conferred by this section shall apply to the trust if and so far only as a contrary intention is not expressed in the trust instrument and shall have effect subject to the terms of that instrument.”
(4) The powers conferred by this section shall be subject to any consent or direction required by the written law or by the trust instrument (whenever commenced or made) with respect to the investment of trust property.
(5) Save as provided in subsection (4), no provision in any instrument (not being a written law or an instrument made under such a law) made before, on or after the commencement of this Act shall limit the powers conferred by this section, except that those powers shall not be exercisable in such a way and to contravene any express prohibition in such an instrument.
[4]. S.5 “(1) Trustees shall make retain and change investments as a prudent investor would having regard to the purposes, distribution requirements and other circumstances of the trust and in doing so trustees shall –
(a) exercise reasonable care and caution and the skill of ordinary persons;
(b) have regard to the suitability of individual investments, not in isolation, but in the context of the trust property as a whole, with a view to obtaining an overall balance of risk and return reasonably suited to the trust; and
(c) have regard to the need for diversification of investment so far as the trustees may consider it to be appropriate to the trust.
(2) Among circumstances to which trustees shall have regard in choosing investments are such of the following as they may consider to be appropriate to the trust or its beneficiaries –
(a) the size of the trust property as a whole and the estimated times and amounts of future distributions of income and capital;
(b) general economic conditions;
(c) the possible effect of inflation and deflation;
(d) the expected tax consequences of investment decisions and of distributions;
(e) the expected total return from income and appreciation of capital;
(f) other resources of beneficiaries;
(g) needs of liquidity, regularity of income and preservation or appreciation of capital;
(h) any special relationship or special value of an asset to the purposes of the trust or to one or more of the beneficiaries; and
(i) intentions or wishes of the settlor or testator, whether or not expressed in the trust instrument.
(3) Trustees shall make reasonable efforts to verify facts relevant to their investment decisions.
(4) Notwithstanding the reference in subsection (1)(a) to the skill of an ordinary person, trustees who have special skills or expertise, or are named or appointed as trustees in reliance upon their representation that they have special skills or expertise, have a duty to the beneficiaries to use such special skills or expertise.
(5) If a trust has two or more beneficiaries, the trustees shall act impartially in investing the trust property, having regard to any differing interests of the beneficiaries.
(6) This section shall apply if and so far only as a contrary intention is not expressed in the trust instrument and shall have effect subject to the terms of that instrument.”
[5]. S.6 “(1) Before exercising any powers of investment, trustees may obtain and consider proper advice on the question of suitability to the trust of any proposed investment.
(2) Trustees retaining any investment may obtain and consider, at such intervals as they consider appropriate having regard to the nature of the investment and other circumstances proper advice on the suitability of continuing to retain the investment or disposing of it.
(3) For purposes of this section, proper advice is the written advice of any investment adviser named in the trust instrument or duly appointed pursuant to its terms, or of any person who is reasonably believed by the trustees to be qualified to give the advice as a result of that person’s ability in and practical experience of financial matters, and notwithstanding that it may be given in the course of that person’s employment as an officer or servant of a company or other institution.
(4) Trustees shall not be liable for any loss which may result from their having made, changed, retained or disposed of any investment pursuant to proper advice.
(5) The powers and immunities conferred by this section are in addition to those conferred by the trust instrument and by law.
(6) This section shall apply if and so far only as a contrary intention is not expressed in the trust instrument and has effect subject to the terms of that instrument.”
[6]. S.7 “Trustees shall not be liable for breach of trust by reason only of their continuing to hold investments which have ceased to be authorised investments.”
[7]. S.24 “(1) Trustees may insure against loss or damage by fire or otherwise any buildings or other insurable property to any amount not exceeding (together with the amount of any insurance already on foot) the value of the building or other property insured or (if greater) the total cost of replacing and reinstating the building or property and may pay the premium for such insurance at the discretion of the trustees out of the income thereof or out of the income or capital of any property subject to the same trusts without obtaining the consent of any beneficiaries.
(2) Subsection (1) shall not apply to any building or property which the trustees are bound forthwith to convey absolutely to any beneficiary upon being requested to do so except that, if the trustees have been insuring the building or property during the subsistence of successive or concurrent interests in it, they may continue to do so after it becomes distributable and until the beneficiary then entitled requests them to cease doing so.
(3) Trustees may insure against personal liabilities which they may incur in the execution of their trusts and may effect fidelity insurance for employees whom they employ in their capacity as trustees and the premiums for any such insurances may be paid out of the capital or income of the trust property at the discretion of the trustees.
(4) Subsection (3) shall not extend to insurance against any personal liabilities which the trustees may incur to any beneficiaries as such for breach of trust or otherwise.”
[8]. S.30 “(1) Trustees or personal representatives may, instead of acting personally, employ and pay an agent, whether a counsel and attorney, foreign lawyer, banker, stockbroker, investment adviser, investment manager or other person to give advice, transact any business or do any act required to be transacted or done in the execution of the trust or the administration of the testator’s or intestate’s estate including the receipt and payment of money.
(2) Trustees or personal representatives may appoint and pay any person to act as their agent or attorney for the purpose of selling, converting, collecting, getting in and executing and perfecting assurances of, or managing or cultivating or otherwise administering, any property subject to the trust or forming part of the testator’s or intestate’s estate in any place inside or outside The Bahamas, or executing or exercising any discretion or trust or power vested in them in relation to any such property, with such ancillary powers and with and subject to such provisions and restrictions as they may think fit including a power to appoint substitutes.
(3) Without prejudice to such general powers of appointing agents as aforesaid –
(a) a trustee may appoint a counsel and attorney or foreign lawyer to be his agent to receive and give a discharge for any money or valuable consideration or property receivable by the trustee under the trust by permitting the counsel and attorney or foreign lawyer to have the custody of and to produce a deed having in the body thereof or endorsed thereon a receipt for such money or valuable consideration or property, the deed being executed or the endorsed receipt being signed by the person entitled to give a receipt for that consideration;
(b) the production of any such deed by the counsel and attorney or foreign lawyer shall have the same statutory validity and effect as if the person appointing the counsel and attorney or foreign lawyer had not been a trustee;
(c) a trustee may appoint a banker or counsel and attorney or foreign lawyer to be his agent to receive and give a discharge for any money payable to the trustee under or by virtue of a policy of insurance by permitting the banker or counsel and attorney or foreign lawyer to have the custody of and to produce the policy of insurance with a receipt signed by him on behalf of the trustee:
Provided that nothing in this subsection shall exempt a trustee form any liability which he would have incurred if this Act had not been passed in the event that he permits any such money, valuable consideration or property to remain in the hands or under control of the banker or counsel and attorney or foreign lawyer for a period longer than is reasonably necessary to enable the banker or counsel and attorney as the case may be, to pay or transfer the same to the trustee.
(4) Subsection (3) shall apply whether the money or valuable consideration was or is received before, on or after the commencement of this Act.
(5) Trustees shall be allowed and paid all charges and expenses incurred under this section out of the capital or income of the trust property, or partly in one way and partly in the other, as the trustees in their absolute discretion think fit.
(6) Trustees who make reasonable efforts to satisfy themselves that an agent has appropriate knowledge, experience and integrity shall not be chargeable with breach of trust or be responsible for any loss by reason only of their having appointed the agent or joined or concurred in that appointment.
(7) Trustee who have made reasonable efforts to keep themselves informed concerning the performance of an agent shall not be liable or responsible for any default or wrongful act of the agent which occurs at a time when the agent appeared to the trustees to be performing honestly and competently.
(8) This section shall apply if and so far only as a contrary intention is not expressed in the trust instrument and shall have effect subject to the terms of that instrument.
(9) Subject as provided in subsection (8) subsections (6) and (7) shall apply to agents appointed under the powers conferred by this section or power in the trust instrument.”
[9]. S.40 “ (1) Notwithstanding any rule of law or equity to the contrary, it shall be lawful for an instrument or disposition to provide that any estate or interest in any property given or to any individual as a beneficiary shall not during the life of the beneficiary, or such lesser period as may be specified in the instrument or disposition, be alienated or pass by bankruptcy, insolvency or liquidation or be liable to be seized, sold, attached, or taken in execution by process of law and where so provided such provision shall take effect accordingly.
(2) Where property is given subject to any of the restrictions contained in subsection (1), the right to derive income from such property by a beneficiary and any income derived therefrom shall not pass bankruptcy, insolvency or liquidation or be liable to be seized, attached or taken in execution by process of law.
(3) Where property is given subject to a restriction against alienation then the right to derive income from that property shall not be alienable for as long as that restriction remains in force.
(4) A restriction imposed pursuant to this section may at any time be removed in accordance with any provisions for such removal in the instrument or disposition and in the manner specified therein.
(5) Neither the settlor nor any other persons donating property to a trust may benefit from the provisions of this section.”
[10]. S.47 “ (1) Where by a deed a new trustee is appointed to perform any trust, then –
(a) if the deed contains a declaration by the appointor to the effect that any estate or interest in any land subject to the trust or in any chattel so subject or the right to recover or receive any debt or other thing in action so subject shall vest in the persons who by virtue of the deed become or are the trustees for performing the trust, the deed shall operate without any conveyance or assignment to vest in those persons as joint tenants and for the purposes of the trust the estate, interest or right to which the declaration relates; and
(b) if the deed is made after the commencement of this Act does not contain a such declaration, the deed shall, subject to any express provision to the contrary therein contained, operate as if it had contained such a declaration by the appointer extending to all the estates interests and rights with respect to which a declaration could have been made.
(2) Where by a deed a retiring trustee is discharged under the statutory power without a new trustee being appointed, then –
(a) if the deed contains such a declaration as aforesaid by the retiring and continuing trustees and by the other person, if any, empowered to appoint trustees, the deed shall, without any conveyance or assignment, operate to vest in the continuing trustees alone as joint tenants and for the purposes of the trust, the estate, interest or right to which the declaration relates; and
(b) if the deed is made after the commencement of this Act and does not contain such a declaration, the deed shall, subject to any express provision to the contrary therein contained, operate as if it had contained such a declaration by such persons as aforesaid extending to all the estates, interests and rights with respect to which declaration could have been made.
(3) An express vesting declaration whether made before, on or after the commencement of this Act shall, notwithstanding that the estate, interest and right to be vested is not expressly referred to and provided that the other statutory requirements were or are complied with, operate and be deemed always to have operated (but without prejudice to any express provision to the contrary contained in the deed of appointment or discharge) to vest in the persons respectively referred to in subsections (1) and (2), as the case may require, such estates, interests and rights as are capable of being and ought to be vested in those persons.
(4) Where a corporate trustee is merged or amalgamated with another corporate trustee, then on the date when such merger or amalgamation takes effect all trust property held by the non-surviving trustee shall automatically and without any action on the part of either trustee vest in the surviving trustee unless the trust instrument specifically prohibits the removal of a trustee and the appointment of a new trustee or requires the consent or approval of a person and such consent or approval shall not have been obtained or such vesting would result in the abrogation of any rights, conditions, terms or provisions contained in such instrument or any instrument effectively amending such instrument.
Subsections (1) to (3) shall not extend –
(a) to land conveyed by way or mortgage for securing money subject to the trust, except land conveyed on trust for securing debentures or debenture stock;
(b) to land held under a lease which contains any covenant, condition or agreement against assignment or disposal of the land without licence or consent, unless prior to the execution of the deed containing expressly or impliedly the vesting declaration the requisite licence or consent has been obtained or unless by virtue of any law the vesting declaration expressed or implied would not operate as a breach of covenant or give rise to a forfeiture;
(6) In this section “lease” includes an underlease and an agreement for a lease or underlease.
(7) This section shall apply only to trust instruments executed after the thirty-first day of December one thousand eight hundred and eighty-one.”
[11]. S.70 “ (1) Where property whether real or personal is held on trusts arising before, on or after the commencement of this Act under any will, settlement or other disposition, the Court may if it thinks fit by order approve on behalf of –
(a) any person having directly or indirectly an interest whether vested or contingent under the trusts who by reason of being a minor or other incapacity is incapable of assenting;
(b) any person (whether ascertained or not) who may become entitled directly or indirectly to an interest under the trusts (whether discretionary or otherwise) as being at a future date or on the happening of a future event a person of any specific description or a member of any specified class of persons , so however that this paragraph shall not include any person who would not be of that description or a member of that class, as the case may be, if the said date had fallen or the said event had happened at the date of the application to the Court;
(c) any unborn person; or
(d) any person in respect of any discretionary interest of his under protective trusts where the interest of the principal beneficiary has not failed or determined, any arrangement (by whomever proposed and whether or not there is any other person beneficially interested who is capable of assenting thereto) varying or revoking all or any of the trusts or enlarging the powers of the trustees of managing or administering any of the property subject to the trusts:
Provided that the Court shall not approve an arrangement on behalf of any person if carrying it out would be detrimental to that person.
(2) In the foregoing subsection “protective trusts” means an interest specified in paragraphs (a) and (b) of subsection (1) of section (39) or like trusts, “the principal beneficiary” has the same meaning as in the said subsection (1) and “discretionary interest” means an interest arising under the trust specified in paragraph (a) of the said subsection.
(3) Where capital or income of the trust property is or may be applicable for a charitable purpose the Court may if it thinks fit by order sanction in respect of that purpose the carrying out of arrangement (by whomever proposed and whether or not there is any person beneficially interested capable of assenting thereto) varying or revoking all or any of the trusts or enlarging the powers of the trustees of managing or administering any of the property subject to the trusts:
Provided that the Court shall not sanction the carrying out of any arrangement if it would be detrimental to the purpose in respect of which such sanction is sought.
(4) In subsection (3) “charitable purpose” means an exclusive charitable purpose but does not include an independent charitable company, association or other separate entity or organisation.
(5) Nothing in the foregoing provisions of this section shall apply to trusts affecting property settled by any written law.”
[12]. S.80 “(1) Subject to provision contained in the trust instrument –
(a) every decision made, resolution passed or power or discretion exercised by trustees is valid if made, passed or exercised by a majority of the trustees if there are more than two of them; and
(b) any deed or other instrument executed by a majority of the trustees pursuant to such a decision, resolution or exercise of power or discretion is likewise valid as if it had been executed by all the trustees.
(2) This section shall not apply to trusts in existence at the time this Act comes into operation.”
[13]. S.83 “ (1) Subject to the provisions of subsection (2) –
(a) trustees of trusts declared inter vivos or otherwise shall be under a legal obligation to take reasonable steps to inform each beneficiary who has, but may not be aware of having, a vested interest under the trusts (whether or not in possession and whether or not subject to defeasance) of the existence of the trusts and of the general nature of that interest; and
(b) at any time when there are no beneficiaries with such vested interests, trustees of trusts declared inter vivos or otherwise shall be under a legal obligation to take reasonable steps to ensure that at least one person who is capable of enforcing the trusts (whether as a beneficiary with a contingent interest, or as the object of a discretionary power or otherwise howsoever) is aware of the existence of the trusts and of the general nature of the interest entitling to enforce them:
Provided that no information shall be given if the trustees in their absolute discretion consider that it would not be in the best interest of the beneficiary to give the information.
(2) Where a beneficiary entitled to information under subsection (1) (a) is a minor or is determined by the trustees acting in good faith to be mentally incapacitated, the trustees shall give information under subsection (1) not to the beneficiary but to the parents or duly appointed legal guardians of minor beneficiary, or (as the case may be) the duly appointed receivers, conservators, curators or other legal representatives of the beneficiary determined by the trustees to be mentally incapacitated:
Provided that no information shall be given if the trustees in their absolute discretion consider that it would not be in the best interest of the beneficiary to give the information.
(3) Save as provided by subsections (1) (b) and (2), and unless a person vested by the trust instrument with power to request or approve disclosure requests or approves such disclosure, trustees shall be under no legal obligation to disclose the existence of their trusts to –
(a) any beneficiaries who are interested only contingently on their surviving other beneficiaries or the settlor, or on the occurrence of other events;
(b) any persons who are only objects of discretionary powers; or
(c) any other persons who are not entitled to vested interests (whether or not in possession and whether or not subject to defeasance) under the trusts.
(4) Subject to the provisions of subsection (9), trustees may nonetheless in their absolute discretion without any such request or approval disclose the existence of their trusts to such persons as are mentioned in subsection (3) (a), (b) or (c) if such disclosure is necessary or convenient in connection with distributions to such persons, or if the trustees in their absolute discretion consider such disclosure to be in the interest of the trust as a whole.
(5) The following provisions shall have effect with respect to the disclosure of documents –
(a) unless a person vested by the trust instrument with power to request or approves such disclosure requests or approves such disclosure, trustees shall be under no legal obligation to disclose to any such persons as are described in subsection (3) (a) or (c) the documents described in subsection (6) or any other documents or information;
(b) subject to the provisions of subsection (9), trustees may nonetheless in their absolute discretion, without any such request or approval, disclose the documents described in subsection (6) and any other information about their trusts to such persons as are described in subsection (3) (a), (b) and (c) at the expense of those persons;
(c) subject to the provisions of subsection (5) (d), trustees shall be under a legal obligation at the request and expense of any beneficiaries having vested interests (whether or not in possession and whether or not subject to defeasance) under the trusts to disclose to such beneficiaries the documents described in subsection (6);
(d) in the case of minor mentally incapacitated beneficiaries the provisions of subsection (2) shall have effect in relation to the disclosure of documents under subsection (5) (c) as they do in relation to the giving of information under subsection (2);
(e) subject to the provisions of subsection (9), trustees may in their absolute discretion disclose to any beneficiaries having such vested interests any other information about the trust property and its administration.
(6) The documents referred to in subsection (5) are –
(a) the trust instrument and all other documents in which the terms of the trust or any exercise of any trust, power or discretion are to be found;
(b) all financial statements of the trust; and
(c) all financial statements of companies wholly owned by the trustees as trustees of the trust.
(7) When disclosing any documents or information to any beneficiary or other person the trustees shall, if other beneficiaries have requested confidentiality or if the trustees in their absolute discretion determine confidentiality to be in the best interest of such other beneficiaries, take all reasonable steps to secure the right to confidentiality of the other beneficiaries by providing such beneficiary or other person only with such documents or information as shall enable that beneficiary’s own true entitlement and actual interest or benefits under the trust to be determined; such documents and information may include copies or certified extracts of the trust instrument or other documents and copies of advice or statements from which the names and interests of other beneficiaries have been edited or deleted in order to preserve the confidentiality to which such other beneficiaries are entitled.
(8) Notwithstanding anything to the contrary in this section, trustees shall not be bound or compelled by the process of discovery or inspection or under any equitable rule or principal to disclose or produce to any beneficiary or other person any of the following documents, that is to say –
(a) any memorandum or letter of wishes issued by the settlor or any other person to the trustees, or any other document recording any wishes of the settlor;
(b) any document disclosing any deliberations of the trustees as to the manner in which the trustees should exercise any discretion of theirs or disclosing the reasons for any particular exercise of any such discretion or the material upon which such reasons were or night have been based; or
(c) any other relation to the exercise or proposed exercise of any discretion of the trustees (including legal advice obtained by them in connection with the exercise by them of any discretion).
(9) Without prejudice to the provisions of subsection (10), no disclosure of the kind otherwise required or permitted by subsections (4), (5) (b) (e) shall be made by the trustees in breach of any prohibition or restriction of such disclosure contained in the trust instrument.
(10) No such prohibition or restriction, and nothing in this section, shall prejudice the validity of any trusts or the entitlement of any beneficiaries who have in any manner become aware of any trusts to obtain orders of the Court for administration or accounts, or for the execution of the trusts, or any other order of the Court not being an order for the discovery, inspection, disclosure or production of such documents as are described in subsection (8), or for any information or disclosure which by subsection (2), (3), (5) (a) or (7) trustees are under no legal obligation to make.”
[14]. S.88 “ (1)Beneficiaries entitled to a share or trust property, whether real or personal and whether or not readily divisible, shall not be entitled to demand the distribution of that share if its distribution would prejudice the value of any other share of the trust property which is not yet distributable.
(2) This section shall not apply to trusts in existence at the time this Act comes into operation.”
[15]. S.92 “ (1)Every trust instrument of which the proper law is the law of The Bahamas and which does not create a bare trust shall be liable; instead of stamp duty, to a duty called “the trust duty” in the sum of fifty dollars.
(2) The payment of the trust duty shall be denoted or expressed by the affixing of a Bahamas revenue stamp to the trust instrument.
(3) A trust instrument shall be deemed to be duly stamped only when one of the persons executing the trust instrument cancels the revenue stamp by writing on or across the same the name or initials of the trustee or the person action on behalf of a corporate trustee as well as the date on which the name or initials of the person is affixed.
(4) A trust instrument not stamped and cancelled in accordance with the provisions of subsection (3) shall not be admissible in civil proceedings, provided that a trust instrument may in the discretion of the Court be admissible in such proceedings on proof of the payment of the trust duty together with a penalty in the sum of one hundred dollars for each calendar year from the execution of the trust instrument.
(5) Any trust instrument that is liable to trust duty need not be produced to the Treasury, Post Office or any other public body for purposes of payment of trust duty.
(6) No trust instrument of which the proper law is the law of The Bahamas shall, except in criminal proceedings, be pleaded or given in evidence or admitted to be good, useful or available in law or in equity, unless it is duly stamped with trust duty in accordance with the law in force at he time when it was first executed.
(7) The penalty referred to in subsection (4) shall be paid in the same manner as the trust duty under subsections(2) and (3) or in such other manner as the Minister may by order direct.
(8) This section applies only to trust instruments executed after this Act comes into operation.”
[16]. S.93 “(1) Notwithstanding any law to the contrary, no income tax, capital gains tax, estate tax, succession tax, gift tax, rate, duty, levy or other charge is payable by any beneficiary who is treated as non-resident for Exchange Control purposes in respect of any distribution to him by the trustee of any trust.
(2) Notwithstanding any provision of the Stamp Act, where all the beneficiaries of a trust are persons who are treated as non-resident for Exchange Control purposes, the trust shall be exempt from the payment of stamp duty with respect to –
(a) all deeds and other written instruments of appointment made pursuant to the trust;
(b) all deeds and other written instruments by which assets are transferred to or from the trustee of the trust; and
(c) all instruments relating to the transfer of beneficial interests in the trust; and
(d) all instruments relating to the transfer of beneficial interests in the trust.
(3) The exemptions din this section shall not apply to any trust which –
(a) has as an underlying asset land in The Bahamas; or
(b) carries on a business or trade in The Bahamas.”
[17]. S.95 “ (1)The Exchange Control Regulations Act shall not apply to any settlor, grantor, donor or beneficiary who is treated under this Act as non-resident for Exchange Control purposes.
(2) The provisions of this section shall apply to all trusts in existence at the time of the coming into operation of this Act as well as to those coming into existence on or after the coming into operation of this Act.
[18]. S.97 This Act shall not affect the legality or validity of anything done before the commencement of this Act except as otherwise hereinbefore expressly provided.
