¶ 1001
Overview
Trusts without beneficiaries. The Trusts Act defines a trust in three limbs. A trust exists where a trustee holds property that is not part of his own estate "(a) for the benefit of any person, known as 'a beneficiary', whether or not yet ascertained or in existence; (b) for any valid charitable or non-charitable purpose which is not for the benefit only of the trustee; or (c) for such benefit as is mentioned in paragraph (a) and also for any such purpose as is mentioned in paragraph (b)." Trusts Act, Cap. 202, s. 2 (rev. ed. 2020) (Belize). The second and third limbs are the subject of this chapter. They admit two kinds of trust that the general law of England has always treated with suspicion: the charitable trust, which the common law permitted but subjected to the supervision of the Crown, and the private trust for a non-charitable purpose, which the common law refused to enforce at all except in a handful of anomalous cases. Belize, following the Jersey model on which much of its Act is built (see supra ¶ 510), permits both by statute.
The statutory provisions. The Act deals with purpose trusts in a small number of sections spread through its Parts. Section 2 admits them to the definition of a trust. Section 7(2)(a)(iii) saves a trust with no identifiable beneficiary from invalidity if it "was created for a valid charitable or non-charitable purpose." Id. s. 7(2)(a)(iii). Section 14 defines a charitable purpose. Section 15 sets the conditions on which a trust "may be created for a purpose which is non-charitable," the most important of which is the appointment of a protector capable of enforcing it. Id. ss. 14–15. Sections 16(5) and 27(3)–(4) direct the fiduciary duties of the protector and the trustee toward the purpose where there is no beneficiary, and assign the enforcement of those duties to the protector or, for a charitable trust, to the Attorney General. Sections 18(4), 28(1)(c) and (e), 29(3) and 58(1) make special provision for charitable trusts as to the number of trustees, information, majority decisions and standing to apply to the court. Section 6(2) is evidently intended to exempt charitable trusts from the maximum duration of 120 years. Sections 44 and 45 deal with what happens when a purpose is fulfilled or fails, the second of them codifying the cy-près jurisdiction for charitable trusts. Part XA adds, for an international purpose trust, the requirement that the purpose be pursued or performed outside Belize. Id. s. 64(1)(f) (as amended by Trusts (Amendment) Act 2023, No. 40 of 2023, s. 6).
Why purpose trusts matter in practice. Purpose trusts are rarely used in Belize to fund monuments or to care for animals, the examples that fill the English casebooks. Their practical value lies in holding property that no one is intended to own beneficially. The commonest modern uses are the ownership of the shares of a private trust company, so that the company that serves as trustee of a family's trusts is itself owned by no member of the family (see infra ch. 13); the ownership of the shares of a special purpose company in a financing transaction, so that the company is "orphaned" from the group that sponsors it; the holding of an LLC or company interest so as to preserve a family business; and philanthropic structures that combine charitable and private elements. Each of these uses depends on the same three features: a valid purpose, an enforcer who will hold the trustee to it, and a destination for the property when the purpose ends.
Purpose trusts and section 7. A purpose trust created under the law of Belize is a trust like any other for the purposes of section 7(6). The Belize court may not vary it, set it aside or recognize a claim against its property under foreign law or a foreign order in respect of marriage, succession or "the claims of creditors in an insolvency." Id. s. 7(6). The protection of section 7 depends, for an international trust, on registration under Part XA. Id. s. 65B(7). The settlor of a purpose trust gives up any beneficial interest in the property, which is the source of the structure's value in asset protection. That value is lost if the trust instrument allows the property to return to the settlor when the purpose ends, and the default rule of the Act does exactly that (see infra ¶ 1060.02).
Charitable trusts and the regulatory overlay. A charitable trust is also a "Non-Profit Organisation" for the purposes of the Non-Profit Organisations Act 2023 if it is established primarily for charitable or similar purposes and raises or disburses funds. Non-Profit Organisations Act, 2023, No. 14 of 2023, s. 2 (Belize). That Act, administered by the Director General of the Financial Services Commission as Registrar, imposes registration, record-keeping, annual return and audit obligations directed at the risk of terrorist financing (see infra ¶ 1070). A Belize charitable trust for an international philanthropic purpose must therefore be designed with the trust law and the regulatory law in view together.
Plan of the chapter. Paragraph 1010 explains the beneficiary principle and the statutory answer to it. Paragraph 1020 examines the conditions in section 15 for a non-charitable purpose trust and compares them with the Jersey law. Paragraph 1030 examines the protector in its role as enforcer. Paragraph 1040 examines charitable trusts, the definition in section 14, the role of the Attorney General and the court, with a discussion of the decision of the Supreme Court of the United Kingdom in Lehtimäki v. Cooper. Paragraph 1050 examines duration and accumulation and the drafting error in section 6(2). Paragraph 1060 examines the failure of a purpose, the cy-près jurisdiction and variation. Paragraph 1070 examines registration, beneficial-ownership reporting and the Non-Profit Organisations Act 2023. Paragraph 1080 examines the principal uses of purpose trusts, their protection under section 7, their comparison with foundations and the main United States tax points. Paragraph 1090 sets out drafting guidance, a model enforcer clause and a checklist.