Be Aware of Bermuda’s Recently Revised Reserved Power Trusts as an Asset Protection Plan

Understanding Enhanced Asset Protection Structure in Bermuda

It is important to know and understand the laws for asset holding when trying to recover claims. New legislation in Bermuda seeks to stimulate the trust industry and to attract international customers who wish to retain a certain level of control over their trusts. The Trusts (Special Provisions) Amendment Act 2014 enhanced the reserved power trusts where a settlor may retain fairly extensive powers over the trust.

The new law adds specific provisions enabling settlors to reserve or grant an extensive range of powers listed in the Act while retaining the legal validity of the trust. Some of these powers include the power to change the terms of the trust instrument; give directions on the payment, distribution or transfer of the trust property; control decisions of trust owned companies; change the trustee, protector, or enforcer; add or exclude beneficiaries; change the governing law; and make trustee actions subject to third party consents. The settlor can reserve the right to revoke a trust without the risk of the trust assets forming a part of the settlor’s estate in the event that the power to revoke has not been exercised prior to death. Further, trustees can be protected from liability for breach of trust in the event they act or refrain from acting in compliance with or as a result of a valid exercise of any of the powers listed in the Act.