The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas is “ahead of the curve” in the trust and estate planning sector thanks to 2011’s legislation upgrades, a leading attorney telling Tribune Business they would enable this nation to go “head to head” with rival jurisdictions.

Bryan Glinton, partner at the Glinton, Sweeting and O’Brien law firm, who is moderating today’s Nassau Conference session on the 2011 trust law amendments and how they impact private clients, said the addition of Executive Entities to the Bahamian product menu had created more options for “structuring” private client affairs.

And he added that the decision to abolish the Rule Against Perpetuities would have a “major impact” on the Bahamas’ attractiveness as an estate planning/private wealth management centre, as it allows trust structures to be maintained indefinitely.

Prior to the Rule Against Perpetuities (Abolition) Act 2011 becoming law, the deeds for all Bahamas-based trusts were supposed to contain perpetuity periods.

These stated the trust’s termination date, and the period beyond which wealth could no longer be accumulated. If no perpetuity period was stated in the deeds, this was instead set by statute at 150 years.

In essence, Bahamian trusts could not have an indefinite life - something that has now been abolished from year-end 2011. No perpetuity period is required in the trust deed, or set in statute.

“That was the major one,” Mr Glinton said of the perpetuities reform. “There are several jurisdictions that have done this, and it certainly provides for us to be more competitive and have these perpetual trusts in the Bahamas.

“After full analysis, it was felt that trusts be shaped more to reflect commercial reality - trusts going beyond one generation, and generations continuing to want to accumulate wealth. Why should they have their hands tied?”

Elsewhere, Mr Glinton said the Trustee (Amendment) Act 2011 introduced “pretty significant” reforms, with trustees no longer liable for investment decisions made “at the direction of a third party” - such as investment advisers.

“That was pretty significant for a lot of the companies that provide trust services in our jurisdiction or provide services to Bahamian trusts,” Mr Glinton said.

Another key development, he added, was that trust disputes could now go to arbitration rather than just be dealt with by the courts.

Parties to trust disputes could also select the jurisdiction of their choice for arbitration, and Mr Glinton added: “There are benefits to be realised from trust disputes that may be arbitrated.

“There’s greater efficiency and speed in the resolution of disputes, and you enjoy confidentiality of arbitration. That becomes very, very important, particularly for those wealthy persons that prefer not to have major trust disputes out in the public sphere through the courts.”

The Trustee Act amendments also made it clear that beneficiaries could challenge the validity of a trust, with the trust instruments potentially providing for their interests to be determined.

Analysing the overall impact of the legislative changes package, Mr Glinton told Tribune Business: “The amendments make our trust legislation very competitive, as we can now go head-to-head with the majority of jurisdictions in this sphere.

“The Bahamas has a strong reputation for its private wealth management, and we need to be ahead of the curve in this area. With these amendments, I certainly think it puts us ahead of the curve.”

As for the Executive Entities Act, Mr Glinton said: “These entities are very unique. We’re among the first jurisdictions to have such a piece of legislation.”

Executive Entities, he added, have limited liability, no capital requirements, no shareholders and can be established for either a set or indefinite time period.

Not designed to hold assets, Executive Entities can only perform executive functions, acting as enforcers, trustees, protectors and investment advisers. They can fulfill office duties, and have the powers of executors, administrators, supervisors and fiduciary players.

“I think it makes it very competitive,” Mr Glinton said of the Executive Entities’ addition to the Bahamas’ product armoury, “because of the fact there is more opportunity for structuring private wealth structures, given the complexity now required for many high net worth individuals in structuring their affairs.”