Turks and Caicos Trusts

Shallow and clear water in Half Moon Bay lagoon — The pristine water at Half Moon Bay Lagoon in the Princess Alexandra National Park.

Trusts are legal arrangements whereby there is a distinction between the legal owner and the beneficial owner of property. Legal ownership is typically transferred to a trustee who will administer and manage the trust's assets for the benefit of the beneficial owners (or in some cases, such as charitable trusts, in furtherance of particular goals and purposes).

With the passage of the Trusts Ordinance of 2016 (and the Trust Companies Ordinance sister legislation), the Turks and Caicos has a rather modern legislative environment for creating and managing trusts. An important additional benefit is that the Turks and Caicos does not have gift, estate, income, or capital gains taxes.

Purposes of Trusts

Trusts are used for a variety of purposes, often including asset protection and tax planning (and avoidance).

Trusts can be set up by a settlor/grantor (the person/entity who initially provides the trust assets) with specific beneficiaries, such as family members, or for a purpose, such as with charitable trusts. For example, a parent may wish to set up a trust for a child in the case of age, infirmity, or profligacy.

Unlike in many other jurisdictions, Turks and Caicos trusts can be perpetual, instead of a limited duration.

Yacht Lady S and yacht Game Changer anchored in the Turks and Caicos — The yacht Lady S and yacht Game Changer anchored off of Grace Bay in the Turks and Caicos.

Revocable vs Irrevocable Trusts

Both irrevocable (the settlor cannot regain control of the trust/assets) and revocable trusts (the settlor can regain control of the assets) are permitted. In many cases, in order to benefit from advantageous tax constructs, an irrevocable trust structure is required.

Difference with Wills

Wills provide details on how you want your assets to be distributed after your death, whereby trusts allow you to transfer assets before your death. Depending on how trusts are structured, it can be possible to avoid the probate process completely with a trust.

Setting up a Turks and Caicos Trust

All trustees and trust companies must be licensed under the Trust Companies (Licensing and Supervision) Ordinance.

The introduction of the 2016 revisions, and the increased capital requirements, resulted in several trust companies and trustees exiting the industry, however, there are still several trust companies in the Turks and Caicos to choose from.

Private Trust Companies

Along with typical trust companies, the Turks and Caicos also allows ‘private trust companies’, namely a company that manages a single trust. There are a variety of restrictions on this form of trust management, such as (in the case of non-charitable trusts) that the settlor has a connection to all beneficiaries (e.g. be related via family or marriage).