The Mauritius Trust
Governed by the Trusts Act 2001, the Trust is a legal arrangement through which the owner divests himself of the legal ownership of the assets settled in the trust in favour of the Trustee(s), with the beneficial ownership being vested in the beneficiaries.
A trust is created by an instrument in writing which should state its object, subject, intention and duties and powers of the trustees. The instrument creating the trust is usually either in the form of a Trust Deed (executed by both Settlor and Trustee) or a Declaration of Trust (executed only by the Trustee).
The common parties to a Trust are:
- Settlor
- Trustee
- Protector
- Enforcer (mandatory for Purpose Trusts)
- Beneficiary/ies
Mauritius law allows for the setting up of various types of trusts:
- Fixed trust
- Discretionary trust
- Protective trust
- Purpose trust
- Charitable trust
Many high net worth individuals have elected Mauritius as their preferred jurisdiction to set up their trust for wealth, estate and succession planning and family office services.
Confidentiality
Asset
Protection
No forced
heirship rules
Tax exemption
possible
KEY FEATURES OF AN AUTHORISED COMPANY
GENERAL
LOCAL
REQUIREMENTS
ANNUAL
REQUIREMENTS
- (a) Confidentiality
- (b) Asset Protection and ring fencing
- (c) No forced heirship rule
- (d) Estate planning
- (e) Discretionary Trust
- (f) Purpose Trust
- (g) Charitable Trust
- (h) Protector
- (i) Taxation
- (j) Duration
- (a) There is no obligation to register the Trust in Mauritius nor is there any disclosure of beneficial owner to any authority. At the option of the Settlor, the Trust may be registered with the Registrar General. Disclosure to third parties is only required in extreme circumstances and must always be accompanied by a court order.
- (b) The assets settled in the Mauritius Trust, in the absence of any intent to deter fraud, are effectively sheltered from creditors. No claim from creditors will be entertained if more than 2 years have elapsed from the date of transfer of the asset into the Trust.
- (c) When a non- resident settlor transfers or disposes trust property, the transfer or disposition shall not be set aside, avoided, or otherwise declared invalid or ineffective by virtue of any rule or law of his domicile or nationality relating to in heritance or succession or any rule or law of a similar nature.
- (d) A trust can:
- provide funding for someone for specific purposes e.g. education fees
- reduce Inheritance Tax, thus allowing more of your estate to go to your family or friends and thereby avoiding all the costs relating to probate
- allow funds / assets to be managed on behalf of someone who may need addtional help e.g. a disabled family member or someone unable to manage assets alone
- provide for spouses and children from previous relationships
- ring fence assets from the consequences of a relationship breakdown
- protect important family assets for future generations
- (e) • It is the most common type of trust used which permits the Trustee to appoint additional beneficiaries or to remove existing beneficiaries at the Trustee’s discretion.
- • It also permits the Trustee to distribute income and capital of the Trust to beneficiaries at their sole discretion.
- • The settlor can provide the Trustee with a letter of wishes for guidance to the latter on the administration of the trust fund upon the demise of the settlor, but may not prescribe to the Trustee any action that they should take.
- (f) A trust may be created for a purpose, notwithstanding the absence of any beneficiary. The purpose of the Trust must be reasonable, specific and capable of fulfilment and not immoral, unlawful or contrary to public policy. A purpose trust must always have an enforcer capable of enforcing the terms of the trust.The trust instrument must cater for the distribution of the assets of the trust upon its termination
- (g) Charitable trusts can be set up for specific charitable purposes as set out in the law. A charitable trust can have perpetual duration. Charitable trusts are exempt from tax.
- (h) A “Protector” may also be appointed to oversee certain decisions of the Trustee(s). The powers of a “Protector” are not prescriptive; they vary according to the circumstances.
- (i) Taxation: Mauritius trusts are subject to a flat rate of income tax of 15% or can elect to opt for non-resident status where the settlor and beneficiaries are non-res idents. Distributions from Mauritius trusts are in all instances exempt from Mauritius tax in the hands of the beneficiaries.
- (j) The duration of a trust other than a purpose trust shall not exceed ninety-nine years from the date of its coming into existence, unless it is earlier terminated. However, a purpose trust, whether charitable or not, may be of perpetual duration.
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