Seychelles Trust

THE SEYCHELLES TRUST

Seychelles Trust

KGN specializes in setting up trusts in the Seychelles.

Seychelles – General information

Location: Archipelago in the Indian Ocean, northeast of Madagascar.

Area: total: 455 km2, land: 455 km2, water: 0 km2.

Natural resources: Fish, coconuts (copra), cinnamon trees.

Population: 93,920 (July 2017 est.).

Capital: Victoria.

Time zone: UTC+4.

Languages: 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 with English common law, French civil law and customary law.

Participation in international organizations: ACP, AfDB, AOSIS, AU, C, CD, COMESA, EITI (candidate country), FAO, G-77, IAEA, IBRD, ICAO, ICC (NGOs), ICCt, ICRM, IDA, IFAD, 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, production per population in this Indian Ocean archipelago has grown to about seven times the level closest to subsistence before independence, moving the island into the group of high-income countries. Growth has been led by the tourism sector, which directly employs approx. 26% of the workforce and directly and indirectly account for more than 55% of GDP, and of the tuna fishery. In recent years, the government has encouraged foreign investment to upgrade hotels and services in the tourism industry. At the same time, the government has taken steps to reduce dependence on tourism by promoting the development of the offshore finance, information and communication sectors and renewable energy.

As a very small open economy dependent on tourism, Seychelles remains vulnerable to developments such as economic decline in countries that supply tourists, natural disasters and changes in local climate conditions and sea temperature. One of the biggest 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).

Basic information and benefits

A trust is created when one legal entity or person (known as the trustee) transfers the legal ownership and management of assets (known as trust assets) to another person or entity (the trustee). Usually, the trustee is tasked with ensuring that the trust’s property generates some value for other people (known as beneficiaries).

A trust is usually governed by the terms and conditions set out in the trust document and in the trust laws of the jurisdiction in which it is created. So, with this in mind, let’s shift the focus to a particular jurisdiction – the Seychelles. Offshore funds have become very popular globally and even more so in the Seychelles.

What is a trust in Seychelles?

Simply put, a Seychelles trust is a trust established in Seychelles. If you are wondering why Seychelles trusts are the most popular worldwide, a brief history can give you an insight into the same. The Seychelles Government drafted the Seychelles International Trusts Act of 1994 after conducting a series of very thorough studies in other top trust jurisdictions.

As a result, the Act became arguably the best trust legislation in the world. In 2011 it was amended by the International Trusts (Amendment) Act 2011. Even better terms were introduced to protect and secure the interests of settlors, beneficiaries and their trusts. The law therefore provides legal means for individuals and entities to protect their assets from 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 important that you get some basic information about setting up a trust in Seychelles. For example, under the Seychelles International Trusts Act 1994, you cannot be a Seychelles settlor if you are a resident of the country. Furthermore, trust property should not include any property located in the Seychelles. Other important features of Seychelles trusts are:

• The trust is superior to civil property rights in the sense that, although the trustee is recognized as the legal owner of the trust property in question, all income and benefits must accrue to the beneficiaries. This is in contrast to civil property law, which gives the owners of the property the freedom to enjoy all the benefits that flow from the property, unless they choose to transfer those benefits.
• Although trusts are by default irrevocable, it is permitted to create both irrevocable and irrevocable trusts.
• There is a provision for a protector. In a trust agreement, a patron is a person or entity whose responsibility is to supervise the trustee on behalf of the settlor.
• A trust’s duration of up to 100 years.
• Charitable foundations are not covered by the perpetuity rules.
• The right to accumulate income for any length of time as long as the term of the trust is still valid
• The lessee has the right to withdraw before his death. In that case, he can specify in the trust document how he wants his trust to be administered.

Advantages of a trust in Seychelles

Now that you know the main features of the Seychelles trust, it’s time to move on to the benefits. This section explains the benefits of a Seychelles trust with more emphasis on the settlor and the beneficiary.

#1: Asset Protection

Under the Seychelles International Trusts Act 1994, when a settlor transfers assets to a trust, the assets are no longer considered part of his estate. This means that they remain intact even in the event of the liquidation or bankruptcy of the founder.

#2: Tax Exemption

The Act exempts Seychelles trusts from taxation on capital gains, income, assets, inheritance, gifts and stamp duty. It gives a trust the freedom to be a tax-free vehicle for accumulating and preserving wealth.

#3: 100 year duration

A Seychelles trust can continue for up to 100 years from the day it was set up. This period is long enough to accumulate wealth and even redistribute it to heirs or other persons/entities of one’s choice.

#4: Simple registration process

The creation process of a trust in Seychelles is very simple and straightforward compared to the process in other jurisdictions. Also, it’s not expensive at all and you’re less likely to feel financially strapped once the process is complete.

#5: Ideal Trust Jurisdiction

From a geographical and cultural perspective, Seychelles is perfectly situated for companies wishing to explore the Afro-Asian international markets for business or other purposes.

#6: Privacy and Discretion

The Seychelles International Trusts Act of 1994 states that the identity of settlors and beneficiaries should under no circumstances be made public unless there is a court order from the Seychelles Supreme Court. Therefore, a trust is usually kept away from public scrutiny unless it is being investigated for crimes such as money laundering, human trafficking or drug trafficking among other serious crimes.

#7: Migration

Trusts are permitted to migrate to and from Seychelles. This means that a trust from e.g. Jersey or Mauritius can migrate to Seychelles and that a trust originally based in Seychelles can migrate to Jersey or Mauritius. It is important because it increases the flexibility with regard to the geographical jurisdiction.

# no. 8: Presence of administrators

As a hub for major trust activities, Seychelles hosts some of the best trustees in the world. They offer premium financial services under the Seychelles Financial Services Authority.

#9: Prevention of probate

Seychelles International Trust Law protects a trust from probate in the event of the settlor’s death. In most other jurisdictions, his estate would be subject to a lengthy and costly probate proceeding, which would interrupt the trust’s activities and jeopardize its continuity.

#10: No forced inheritance

In addition to protection from probate, the law also protects trusts from being transferred to heirs without reason. This is very important for a settlor who wants to determine who will inherit the estate, rather than letting the next of kin take automatic ownership.

Conclusion

As you can see, a Seychelles trust has many benefits, all of which are guaranteed by Seychelles law. There is no doubt that the country is one of the friendliest environments for trusts in the world, so it should come as no surprise that most settlors actually consider it a prime location for trusts.

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Costs of setting up a trust in Seychelles

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