Bermuda introduces unprecedented changes to legislation on settlor reserved powers
The reservation or grant of certain powers by settlors has always been possible under Bermuda’s trust legislation, but historically there has been some uncertainty about exactly how far settlors could go without calling the validity of the trust structure into question. The recently passed Trusts (Special Provisions) Amendment Act 2014 (the ‘Amendment Act’) now provides statutory clarity and certainty in this area.
Helpfully, the Amendment Act expressly lists certain interests and powers that can be retained by a settlor or granted to a third party, for example a protector or beneficiary, without prejudicing the validity of a trust. It also clarifies that the retention or grant of these powers and interests will not cause the property in the trust to become part of the settlor’s estate — introducing certainty in this area distinguishes Bermuda from some of the other major offshore jurisdictions.
The Amendment Act expressly states that any and all of the following interests or powers can be reserved by the settlor or granted to a third party…
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