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Belize as a Jurisdiction

By John Dietz - Email Editor

Date: Aug 08, 2006

In last weeks article, I mentioned that I wanted to get into a little more detail relating why the country of Belize is such a great jurisdiction. In an excerpt from last week's newsletter, I said: "Of course tourism is not why I visited; the reason was because Belize has great Trust laws, a stable government, and a well-run banking system." There are many jurisdictions to choose from. In fact, I get asked questions all the time like, "What is the best jurisdiction?" or "Can you give me the top ten?" The answer is that it may not matter. I know; it sounds crazy when you first hear it, but bear with me if you're a new subscriber. The Kinetic Model of Asset Protection changes the way pieces are put together. It also allows for any eventuality with a very complete checks and balances system. In other words, it is exceedingly difficult, if not impossible, for someone to take your money.

There are some promoters who are tied to certain jurisdictions or one-size-fits-all models. This thinking is kind of like your local municipality requiring that any building being built within their borders must use a certain lamppost that you can only get from one vendor. You can bet the price of the required lamppost will be a sizable up-tick from your normal everyday lamppost. THIS one-size-fits-all model has an incredible amount of hidden dangers.

If you're the only ice cream stand in town, how good does your ice cream need to be, and what is the price? I think we all know the answer. What if a leader of one nation decides to create some new laws that are not favorable to Trusts and their underlying assets? The Kinetic Model never puts you at risk of some nation changing policy in midstream. Or what if a Trust Company decides to get out of the Trust business? (Some of you know this just happened recently.) The point is, if I am going shopping, I want the best price, and I want the best service. Let's go back to the lamppost example. How much service do you think you are going to get if the lamppost breaks, knowing there is only one vendor to fix it? Hmm...

So to the question:

Does the jurisdiction matter?

Yes and No.

Here are some common sense criteria:

Is the GDP of this nation dependant solely or largely on its Trust business?
Belize is a multi-industry jurisdiction with agriculture, manufacturing, tourism and other areas of the economy dominating the domestic landscape. The contribution of the Trust business to the GDP is actually less than 2% in total.

Is the country on any black list relating to money laundering or any other unlawful activity?
Belize is not on any of these multi-lateral blacklists.

Has the nation enacted Asset Protection laws?
Belize has enacted what are considered leading Asset Protection legislation, having learned from other jurisdictions as to what works and what doesn't.

What is the cost to settle a Trust in the jurisdiction?
A good Belize trustee is not the cheapest, but far from the most expensive.

Now back to the point: Why Belize, if the jurisdiction does not matter?

For me, this is simple: Belize has some of the most user-friendly and stable Trust legislation you can find anywhere in the world. When you look at Belize's statutory law, the first thing that stands out is the Statue of Limitations. In common-law jurisdictions, as some of you might know, there is the existence of laws against a fraudulent conveyance. Good laws, because they help to protect unsuspecting persons from being scammed, and possibly being put back in the position they were in initially. The law in Belize also allows for this, under the Law of Property Act and the Bankruptcy Act. The law of property act, section 149, for example, reads, in relevant part (for the legal minded):

(1) Except as provided in this section, every transfer of property made, whether before or after the commencement of this Act, with intent to defraud creditors, shall be voidable, at the instance of any person thereby prejudiced.

(2) This section shall not affect the operation of a disentailing assurance or the law of bankruptcy for the time being in force.

(3) This section shall not extend to any estate or interest in property transferred for valuable consideration and in good faith or upon consideration and in good faith to any person not having, at the time of the transfer, notice of the intent to defraud creditors.

So far nothing earth shattering. When you apply the language of the Belize Trust Act (Cap 202 of the Laws of Belize), you conclude that the sections of the previous two acts, allowing for the application of fraudulent conveyances, are expressly excluded from being applied to any Trust that is settled under the laws of Belize. The Belize Trust Act, section 7(6) reads, in relevant part:

--7(6) Where a trust is created under the law of Belize, the Court shall not vary it or set it aside or recognise the validity of any claim against the trust property pursuant to the law of another jurisdiction or the order of a court of another jurisdiction in respect to (a) the personal and proprietary consequences of marriage or the termination of marriage; (b) succession rights (whether testate or intestate) including the fixed shares of spouses or relatives; or (c) the claims of creditors in an insolvency.

--7(7) Subsection (6) above shall have effect notwithstanding the provisions of section 149 of the Law of Property Act,…

This means that once the Settlor passes assets under the Trust to the Trustee, the Trust is immediately settled. That's a pretty warm fuzzy feeling!

You get instantaneous protection from the intrusion of interested, but undesired parties who would want to get their hands on your hard-earned money. You can rest assured that there will be no period of uncertainty as to the security of your Trust instrument. In the Cook Islands, for example, there is a time period of, generally speaking, two years before the Trust can be viewed as a legitimate conveyance, not some sham. In Belize, there is the appreciation of the desire for immediate coverage, because not all of us would like to wait for two years.

Belize's time zone in the world makes it easy to interact with all of the U.S. during business hours. So at the end of the day: good people make a difference, good jurisdictions make a difference, competition makes a difference. Belize at this juncture has it all. And if any of this ever changes, then it will be time to go shopping. With our Kinetic model, we'll have no problem.

Until next time,

John

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