What is a Trust and Key Parties to Trust

In basic terms, a Trust is a legal private agreement (“Trust Deed”) between:

Settlor - the person who place the assets in the Trust and
Trustees - the individual or corporation entrusted with the protection, management and ultimate distribution of the assets
Beneficiaries - the persons entitled to benefit from the capital assets and/or income held in the agreement

Also, a trust is a juridical act whereby a person (whether an individual or a corporation) transfers assets to another person (whether an individual or a corporation) either for his/her own benefit or the benefit of third parties. This transfer may be revocable or irrevocable, depending on the particular needs of the Settlor.

The person transferring assets is called the Settlor or Grantor; the person receiving the assets in trust is called the Trustee (a licensed company recommendable) and the recipients of the assets and/or interests are the beneficiaries.

Benefits of a Trust

Tax Neutrality: No BVI income, capital gains, or inheritance taxes ASSETS PROTECTION- The Settlor is able to provide long-term protection to his/her assets outside the country of his/her residence or domicile free from the danger of expropriation by government agencies. The assets are held in the name of the Trustee or its nominees and so worldwide central control is obtained.

The Settlor can advise on the administration of the assets up to his/her death (including this in the Trust Deed or in the Letter of Wishes). The Settlor will also advise who is to benefit and in what proportion after his/her death. These aspects are particularly attractive to residents in countries that have strict laws on inheritance and can enable payments to be made to people who might have to be excluded from a will made in the Settlor’s homeland. ANONYMITY AND FLEXIBILITY- The Trust Deed is a private document. The Trust instrument can have flexible clauses like the possibility of revoking the Trust, allowing the removal of the Trustee.

Legal Framework

The BVI trusts are mainly overseen by:

The Trustee Act (Cap. 303) - establishing principles of law according to which trusts are established and operate; and The Virgin Islands Special Trusts Act (VISTA) - another BVI innovation that enables trustees, without becoming involved in the management, to hold a share in BVI companies.

Notwithstanding some few exceptions (some charitable or purpose trusts), BVI trusts are not publicly registered and therefore the settlor and the beneficiaries are kept anonymous.

Types of Trusts

In BVI, we have mainly three different types of Trust. Below is comparison for the different trust types

Trust Type	Overview	Confidentiality	Recommended Use
General / Discretionary	Trustee distributes assets at their discretion to beneficiaries.	High – beneficiaries known to trustee.	Family wealth management, estate planning, flexible asset distribution.
Purpose Trust	Established for a specific lawful purpose, not for individual beneficiaries.	High – beneficiaries known to trustee.	Corporate assets, special-purpose investments, holding assets without disclosing beneficiaries.
VISTA Trust	Holds BVI company shares; trustee does not interfere with company management.	Very High – ownership and control remain private.	Succession planning for family/business companies; maximum privacy with operational control retained by directors.

Advantages / Disadvantages Summary

Trust Type	Advantages	Disadvantages
General / Discretionary	Flexible distributions, estate planning, asset protection, widely recognized	Settlor loses control, depends on trustee competence, minor disclosure for KYC
Purpose Trust	No beneficiaries, privacy maintained, perpetual, ideal for corporate assets	Requires enforcer, less familiar structure, professional/admin costs
VISTA Trust	Control retained by directors, smooth succession, private ownership	Limited to holding shares, cannot hold other assets

Conclusion

To conclude, BVI trusts are a flexible and confidential way of managing and securing assets, and there are different structures that can be used depending on the purpose. General or discretionary trusts are flexible and offer the benefits of estate planning, whereas purpose trusts are specific and lawful and offer high privacy. Nevertheless, when clients want the highest level of confidentiality, operational control and succession planning especially concerning the corporate shares then the VISTA Trust is the best option.

Below is a simplified structure of a typical BVI VISTA Trust setup:

graph TB
  A["Settlor"]
  B["BVI VISTA Trust<br/>BVI Private Trust Company (PTC)<br/>Trust Deed Governs Terms<br/>Protector (Optional)"]
  C["BVI Holding Co<br/>Directors (Often Settlor of the Trust, or a Nominee)<br/>100% Owned by the Trust<br/>Owns Underlying Assets, investments or subsidiaries Cos"]
  D["Beneficiaries<br/>Family / Individuals / Charitable Institution"]

  A --> B --> C --> D

Vista Trusts are a special type of trust adopted in the BVI which can only hold shares of a BVI company, hence this trust is always linked to a BVI company. The idea is for the BVI company to be the owner (holder) of the different assets which are be covered by the umbrella of the trust enabling the board of directors of the BVI company to manage the affairs of the assets directly. In this type of trust the trustee is merely a custodian of the shares and its function is basically to comply with the formalities and conditions included in the trust deed in regards to distributions to different types of beneficiaries.

Frequently asked questions

Who are the main parties involved in the trust?

Primarily any trust involves three parties. Settlor, Trustee and Beneficiaries. Appointment of protector is optional to oversee trustee actions.

Is Trust a Legal entity?

No. A trust is a legal relationship, not a separate legal entity. The trustee holds assets in their name for the benefit of others.

Does Trust need to be registered publicly?

No. BVI trusts (other than certain charitable or purpose trusts) are not publicly registered, ensuring privacy of the settlor and beneficiaries

Which trust is best to ensure the settlor has the ultimate control?

A Vista Trust as the settlor retains control over company management

Is the trust subject to tax in the BVI

No BVI income, capital gains, inheritance, or gift taxes apply to trust assets.

Can a BVI trust hold shares in a company?

Yes. In fact, many BVI trusts hold shares in BVI or foreign companies. A VISTA Trust is specifically designed to hold BVI company shares while allowing directors to manage without trustee interference.