Destination for Family Offices & Trusts:
Family Offices: For decades, high-net-worth individuals and families have valued Bermuda for the array of services available in the jurisdiction to support trust structuring, private-wealth preservation, estate management and succession planning.
As HNWls continue to look for better ways to protect and manage their wealth, Bermuda is leveraging its well-earned reputation as a leading trust and private client centre to firmly position itself as an ideal location to establish and/or operate a family office.
The island uses English common law and principles of equity, with recourse to the UK Judicial Committee of the Privy Council. Overlaying this foundation, which provides certainty and predictability, Bermuda continually implements and updates its laws to facilitate the use of trusts and other investment structures for modern commercial applications. Domestic legislation has allowed for progressive and innovative products that family offices find useful, such as private trust companies (PTCs) and segregated accounts companies (SACs).
A tax-neutral jurisdiction, Bermuda has no income, capital gains or corporate taxes. Its consumption-based system does levy payroll tax, import duties, social insurance, and custom duties on goods and services-a major component of the island's tax revenues. Bermuda's unique tax system was designed to support its own infrastructure.
Whether a single- or multi-family office, there will be a number of specific functions that need to be executed with skill and efficiency, such as legal and fiduciary services, asset allocation, investment management, insurance, administrative services, philanthropy and charitable giving. Family office operators may choose to outsource all these functions, hire talent to execute them in-house, or some combination of the two.
Bermuda can offer the full suite of products and services a family office could need. The island is a premier international financial centre, well-known for its insurance and reinsurance industry, but also endowed with mature and well developed trust, asset management and administration sectors, all of which touch the family office space. Add to these the diverse range of service providers such as tax and regulatory compliance experts, auditors, accountants, and business advisory firms, and it becomes clear that Bermuda is uniquely equipped to be a one-stop shop for attending to the professional needs of a family.
Bermuda is a democratic, self-governing British Overseas Territory, with a political system that provides stability and consistency. It is a safe and secure jurisdiction, where terrorism, kidnapping, violence, crime, natural and man-made disasters are not everyday concerns.
It has a history of being transparent yet discreet; while Bermuda complies with the highest international standards of tax and anti-money-laundering compliance, there are governmental controls in place to ensure that any solicitations for financial information are properly approved in accordance with tax information exchange agreements and other official arrangements, to minimise the risk of inappropriate requests.
Besides its appeal from a financial services perspective, Bermuda is also a convenient and comfortable place to live and work. The island's location in the North Atlantic, with easy access to London, New York, Miami and Toronto, makes it an ideal jumping-off point to major financial hubs and gateway cities to and through which HNWls and their children travel most frequently. Flight times average less than two hours to New York, and less than seven hours to London.
A Bermuda Trust offers foreigners a tax free, flexible, trust structure. A Bermuda Trust is governed by several laws including the Trusts Act of 1989, the Trustee Act of 1975 (amended in 1999, 2004, and 2014), Perpetuities Act of 2009 (amended in 2015), and the Trusts Amendment Act of 2014.These laws established Bermuda trusts to be used for estate planning, personal and financial planning, tax exemptions, and business planning. Bermuda trusts now provide:
- Asset Protection from future personal liabilities;
- Providing for spouses and dependents;
- Minimizing income tax, estate tax, inheritance tax, and capital gains tax;
- Preserving family wealth and family business continuity;
- Ownership of assets;
- Efficient distribution of assets upon the settlor’s death; and
- Establishing employee benefit and pension plans.
A Bermuda Trust offers the following types of benefits:
- Complete Foreign Participants: The settlor, trustee, protector, and beneficiaries can all be foreigners.
- Tax Free: Bermuda imposes no taxes on their trusts. However, U.S. taxpayers must report all global income to their IRS just like anyone subject to global income taxation must report all income to their governments.
- Flexibility: Several different types of trusts can be formed including purpose trusts, discretionary trusts, and fixed interest trusts.
- Asset Protection: Trust assets are owned by the trustee preventing future creditors of the settlor and beneficiaries from having any claims on them.
- Estate Planning: Bermuda trusts are perpetual allowing endless family estate planning benefits.
- Fast Formation: Trusts can be formed in one day.
- Privacy: Trust do not register with the government so no public records exist.
- English: Since 1707, Bermuda has been a British Overseas Territory making English the official language.