Belize

Why Belize. Belize is often listed with the Cook Islands and Nevis as a leading asset protection jurisdiction. It is a strong one. Its protection rests on section 7 of the Trusts Act, which directs the Belize court not to set aside a Belize trust or recognize any claim against its property under foreign law or a foreign court order relating to marriage, succession or "the claims of creditors in an insolvency." The last phrase is the key to Belize, and the phrase most widely misread. Insolvency is a financial condition, distinct from bankruptcy, which is a legal proceeding. A debtor is insolvent if the debtor's debts exceed the debtor's assets, or if the debtor is not paying debts as they fall due, whatever the debtor's net worth and whether or not any proceeding has begun. Every creditor who seeks to reach trust property on the theory that a transfer defrauded it is, by the nature of the claim, a creditor of a debtor who will not or cannot pay. Section 7(6)(c) therefore reaches fraudulent transfer claims under foreign law, and Belize needs no fraudulent-disposition code with limitation periods and standards of proof, because it does not entertain such foreign claims against its trusts at all. This chapter explains that reading, the statute that supports it and the places where the protection still depends on the general law of Belize.

The jurisdiction. Belize is an independent Commonwealth realm on the Caribbean coast of Central America, formerly British Honduras, independent since 1981, with a population of about four hundred thousand. Its legal system is based on English common law. Since June 1, 2010, its final court of appeal has been the Caribbean Court of Justice, which replaced the Judicial Committee of the Privy Council (see infra ¶ 2470.01). Financial services, including trust business, are regulated by the Financial Services Commission, which replaced the International Financial Services Commission under the Financial Services Commission Act 2023. Belize has had a turbulent relationship with international tax and anti-money laundering bodies, having been placed on and removed from the European Union's list of non-cooperative jurisdictions more than once (see infra ¶ 2470.03).

Scope of the chapter. This chapter applies the framework of chapter 21 to Belize. It examines the Trusts Act framework (see infra ¶ 2410), section 7 (see infra ¶ 2420), the creditor's position in Belize (see infra ¶ 2430), settlor powers, protectors and migration (see infra ¶ 2440), the cases (see infra ¶ 2450), foundations, LLCs and companies (see infra ¶ 2460), courts, regulation and international standing (see infra ¶ 2470) and structuring and U.S. reporting (see infra ¶ 2480), and closes with Belize in the Threat Matrix (see infra ¶ 2490).

Sources and a caution. This chapter relies on the Trusts Act, Cap. 202, Revised Edition 2020, showing the law as of December 31, 2020, as published by the Financial Services Commission, and on the Commission's notices concerning later amendments. Commentary published by practitioners and promoters frequently attributes to Belize a two-year limitation period, a requirement that fraud be proved beyond reasonable doubt, a provision making Belize trusts immune from bankruptcy in general terms and a repeal of the Law of Property Act's fraud-on-creditors provision. None of these appears in the Revised Edition or in the Trusts (Amendment) Act 2023, the only later amendment identified. The planner should rely only on the current statute and on the written opinion of Belize counsel.

The suitable client. Read correctly, section 7(6) protects a Belize trust against the claimants American clients most fear: the divorcing spouse, the heir with a forced share, the trustee in bankruptcy and the ordinary judgment creditor who seeks to reach trust property because the settlor has not paid (see infra ¶ 2420.06). Belize therefore suits the same range of clients as the Cook Islands and Nevis: a solvent client with substantial liquid assets beyond the client's needs and a realistic risk of large future claims (see supra ¶ 2210.07). It may particularly suit a client concerned with divorce or a forced heirship regime, against which section 7(6)(a) and (b) are categorical, and a client with ties to Central America who values the trustee's proximity. The planner should weigh Belize's listing history and the untested position of its final court against its statute (see infra ¶¶ 2470.01, 2470.03).