Trusts and Related Tax Issues in Offshore Financial Law

by Antoine, Rose-Marie Belle

• ISBN13: 9780199252220
• ISBN10: 019925222X
• Format: Hardcover
• Copyright: 2005-06-23
• Publisher: Oxford University Press

Summary

Offshore trusts are important creations of offshore financial centres and significant departures from traditional common law trusts. They are vehicles for tax planning, estate planning, anti-forcedheirship, asset protection, and broader investment, which operate within a special legal framework, embodying radical legal concepts. This book examines the relevant legislation, case-law, and public policy issues, providing a valuable resource for practitioners and academics in this complex and growing area.

Author Biography

Dr. Rose-Marie Belle Antoine is Programme Director of the graduate law programme at the University of the West Indies and a Senior Lecturer in Law. She is also an attorney-at-law and an international legal consultant, and has undertaken work on behalf of organizations such as the ILO, the World Bank, and the Inter-Development Bank.

Table of Contents

Tables of Cases	xix
Tables of National and International Legislation	xxxi
I FUNDAMENTALS OF THE OFFSHORE TRUST
1. Introduction-The Place of the Offshore Trust in the Offshore Financial Centre	3	(10)
A. Introduction
B. Features of Offshore Centres
C. Offshore Trusts Force a Jurisprudential Review of Trusts
D. Wider Issues Relating to Offshore Financial Centres
E. Suitability of the Trust to International Commerce
F. Direction of the Work
G. Relative Uniformity in Offshore Trusts Law
H. Persuasive Precedents in Similar Offshore Jurisdictions
2. Anatomy and Functions of the Offshore Trust	13	(24)
A. Nature of the Offshore Trust
B. Characteristic Features of the Offshore Trust
C. Constituting a Valid Trust
3. Special Trust Vehicles	37	(20)
A. Asset Protection Trusts
B. The Emergence of the Purpose Trust
C. Description of Key Provisions on Offshore Purpose Trusts
4. The Role and Powers of the Offshore Protector	57	(20)
A. Introduction-Rise of the Institution of the Protector
B. Description of the Protector
C. Case Law Approach to the Protector-Fiduciary or Non-Fiduciary
D. Accountability of the Protector
E. The Enforcer
5. Questions of Legitimacy and the Offshore Trust	77	(12)
A. Introduction
B. Self-settled Protective Trusts and Public Policy
C. Justifying the Use of Offshore Trusts
D. Defending Public Policy Challenges to Offshore Trusts
E. Attacks on Offshore Financial Regimes
F. Future Discussions on Validity
6. Acceptance of the Offshore Trust	89	(8)
A. Introduction
B. Category of Trust-Hybrid Functions and Their Validity
C. A True Trust-Recharacterization
D. Public Policy and Validity
E. Evolution of the Trust
II CHALLENGES TO THE OFFSHORE TRUST AND COMMON PITFALLS TO AVOID
7. Disclosure and Confidentiality Obligations	97	(30)
A. Introduction
B. Trusts and Confidentiality Norms in Offshore Jurisdictions
C. Rights to Information on the Offshore Trust
8. The Offshore Trust as a Sham	127	(26)
A. The Essence of a Sham Trust
B. Identifying Offshore Trusts as Shams
C. Neutral Features which May Lead to Sham Findings
D. Protecting Against Sham Attacks
9. The Law on Fraudulent Conveyances and the Offshore Trust	153	(38)
A. The Relevance of Fraudulent Conveyancing Law to Offshore Trusts
B. The Problem of Identifying Appropriate Creditors
C. Tests to Determine to which Future Creditors the Law Applies
D. Offshore Legislation on Fraudulent Conveyancing and Related Jurisprudence
E. Liability of Professionals
10. Duties of Trustees in Managing Offshore Trusts	191	(38)
A. General Duties under the Common Law
B. Exploring the Duty to Invest
C. Special Considerations for Trustees
D. Finding the Equitable Balance
E. Abdication and Delegation of Discretion
F. Responsible Business Transactions
G. Avoiding Liability
11. Liability of Third Parties to the Trust	229	(22)
A. Development of Third Party Liability in Modern Commerce
B. Knowing Assistance or Dishonest Assistance
C. Knowing Receipt
D. Special Parties and Strangers 'Who Assist and Receive
E. Other Avenues for Liability
12. Liability of Directors of Offshore Corporate Trustees	251	(18)
A. 'Whether Directors are Liable for Breach of Trust
B. Direct Liability for Breach of Trust
C. Methods to Sidestep Limited Liability-Piercing the Corporate Veil
D. Negligence of Directors
E. Third Party Liability of Corporate Trustees
F. Indirect Fiduciary and Tortious Duty-Dog Leg Claims
G. Duties of Nominee and Non-executive Directors
H. Modern Statutory Position
III THE OFFSHORE TAX FUNCTION
13. Responses to the Tax Function of Offshore Trusts	269	(20)
A. Introduction
B. Harmful Tax Competition versus a Level Playing Field for Tax
C. Impact of Anti-money Laundering Laws on Tax Offences
D. Legitimacy of the Tax Function and Jurisdiction to Tax
E. Continued Opportunities in Offshore Tax Planning
F. Tax and Human Rights-Protecting Offshore Trusts?
G. Onshore Professionals Have a Duty to Advise on Offshore Opportunities
14. Overview of Statutory Tax Countermeasures against Offshore Trusts	289	(22)
A. Introduction
B. The United Kingdom
C. Anti-avoidance Measures from the US
D. Canada
E. Statutory Disclosure Initiatives Relating to Tax and Trusts
15. Judicial Engineering of the Tax Function of Offshore Trusts	311	(14)
A. Introduction
B. Interpreting Tax Avoidance
C. Tax and Sham Trusts
16. Bilateral Routes to the Tax Function and the Question of Sovereignty	325	(20)
A. The Non-enforcement of Foreign Fiscal Law-Sustaining the Tax Function of Offshore Trusts
B. International Assistance, Treaty Arrangements, and their Impact on the Taxation of Offshore Trusts
17. Duties of Offshore Trustees in Relation to Tax	345	(22)
A. Introduction
B. Duty not to Incur Further Tax Liabilities
C. Duty of the Trustee to Pay Taxes
IV THE CONFLICT OF LAWS AND THE OFFSHORE TRUST
18. Transplanting the Common Law Trust-Conflict of Laws and the Acceptance of the Offshore Trust	367	(6)
A. Introduction
B. The Hague Convention on Trusts
19. Jurisdiction over the Offshore Trust	373	(26)
A. The Importance of the Jurisdiction Question
B. Traditional Bases for Jurisdiction
C. Exclusive Jurisdiction
D. Rules for Declining Jurisdiction
E. Offshore Factors Important to Jurisdiction
20. The Proper Law of the Offshore Trust	399	(24)
A. Introduction-Uncertainty of Rules on Proper Law
B. Offshore Provisions-Offshore Law Chosen as Proper Law
C. Impact of the Hague Convention on the Recognition of Trusts
D. Peculiarities of Offshore Trusts
E. Interpretation of Law Most Closely Connected under the Hague Convention on the Recognition of Trusts
F. Scope of Proper Law
G. Distinction Between Choice of Law Rules on the Interpretation of the Trust and the Validity of the Trust
H. Challenges to the Parties' Choice of Law
I. Hague Convention's Influence on Express Choice Tested
J. Choice of Law and Judicial Power to Vary the Terms of the Trust
K. Change of Proper Law
21. Recognition of the Offshore Trust in Civil Law Countries	423	(14)
A. Introduction
B. Civil Law Confrontations with the Trust
C. Increasing Use of the Offshore Trust in Civil Law Countries
D. The Hague Convention and Offshore Provisions on Recognition of the Trust
E. The Trust as a Foundation
F. The Trust as a Corporation-Rejecting Contractual Concepts
G. Explicit Recognition as a Trust
H. Conclusion
22. Rights to Succession-Forced Heirs and the Offshore Trust	437	(16)
A. Introduction-Addressing Mandatory Succession
B. Anti-forced Heirship Provisions to Resolve Conflicts
C. US Decisions on Forced Heirship Policies
D. Other Common Law Decisions on Forced Heirship
E. Hague Convention and Forced Heirship
F. Public Policy and Forced Heirship
G. Consideration of Trust Interests in Maintenance and Spousal Awards
H. Forced Heirship Provisions do not Override Trustees' Discretion
I. Validity of Hostile Beneficiaries Clauses
J. Forced Heirship and Disclosure
K. Conclusion
23. Capacity to Create the Offshore Trust and Initial Transfers of Assets	453	(20)
A. Introduction-The Importance of Preliminary Questions
B. Offshore Aims in relation to Preliminary Issues
C. Validity of the Transfer-Alienation of the Property
D. Capacity to Create the Trust
24. The Non-enforcement of Foreign Judgments under Offshore Trust Law	473	(26)
A. Introduction
B. Traditional Rules on Enforcement
C. The Rule on Non-enforcement of Foreign Revenue, Penal, and Public Penal Law
D. Obtaining Restraint Orders against Offshore Trusts
Bibliography	499	(4)
Index	503