¶ 1101
Overview
The provision. Section 7 of the Trusts Act is the provision for which Belize trusts are best known. Its first five subsections state the rules of validity and invalidity that apply to every trust within the Act. Its sixth and seventh subsections state the rule that gives a Belize trust its protective character: where a trust is created under the law of Belize, the Belize court "shall not vary it or set it aside or recognise the validity of any claim against the trust property pursuant to the law of another jurisdiction or the order of a court of another jurisdiction" in respect of marriage, succession and "the claims of creditors in an insolvency," and that rule has effect notwithstanding three named Belize statutes. Trusts Act, Cap. 202, s. 7(6)–(7) (rev. ed. 2020). Earlier chapters introduced the provision (see supra ¶¶ 160.01–160.08), placed it within the Belize law of conflict of laws (see supra ¶¶ 480.01–480.04) and within the architecture of the Act (see supra ¶¶ 530.08–530.09, 580.01–580.04). This chapter gives it a complete statutory treatment.
A rule addressed to the court. Section 7(6) is framed as a direction to the Belize court. It does not declare that foreign claims are extinguished. It does not purport to bind a foreign court. It tells the Supreme Court of Belize, now styled the High Court in its own judgments, what it must not do when a foreign claim is brought against a Belize trust. Trusts Act, Cap. 202, s. 67(1) (definition of "Court"); see supra ¶ 230.03. The form of the rule determines its reach. It governs every proceeding in Belize in which a claimant seeks to vary or set aside a Belize trust, or to make good a claim against its property, on the strength of foreign law or a foreign order. It operates on the trustee indirectly, because a trustee who looks to the Belize court for directions will be directed in accordance with it. It does not operate on a foreign court, which will apply its own law to the settlor and to any property and persons within its reach (see infra ch. 26).
Three categories, one design. The three categories in section 7(6) are the claims that most often threaten a trust established by a person of wealth: the claim of a spouse or former spouse, the claim of an heir entitled to a fixed share, and the claim of a creditor. In each case the foreign law that gives the claimant its right is not to be applied in Belize against the trust property, and a foreign order made under that law is not to be recognised. The design differs from the fraudulent-disposition codes of the Cook Islands and Nevis, which admit a foreign creditor's claim and then confine it by elements, standards of proof and limitation periods (see supra ¶ 130.02). Belize does not admit the foreign claim at all, within the three categories, so that it has no need of a code to confine it.
The central question. Paragraph (c) of section 7(6) is the paragraph on which the protective value of a Belize trust against creditors depends. It is also the paragraph most often misread. The phrase "the claims of creditors in an insolvency" refers to the financial condition of insolvency, which a debtor is in when he cannot or does not pay his debts as they fall due or when his liabilities exceed his assets. It is not confined to bankruptcy, which is one proceeding that may follow from that condition. A creditor who seeks to reach the property of a Belize trust because the settlor has not paid it is a creditor in an insolvency, whether it acts alone as a judgment creditor or through a trustee in bankruptcy. This chapter sets out the textual, structural and statutory grounds for that reading (see infra ¶ 1150), states the contrary commentary and answers it (see infra ¶ 1150.10), and examines the express override in section 7(7) that confirms it (see infra ¶ 1160). Chapter 23 examines fraudulent-transfer claims under foreign law in full, and chapter 24 the Insolvency and Bankruptcy Act 2025 (see infra chs. 23, 24).
The limits. Section 7(6) is broad within its terms. It has limits, and a planner who relies on it must know them. It protects only a trust "created under the law of Belize." It protects an international trust only while the trust is duly registered. Trusts Act, Cap. 202, s. 65B(7). It is concerned with claims under foreign law and foreign orders, and leaves to the general law of Belize the claims that arise under Belize law and fall outside the three categories. It does not cure a disposition that never took effect, a trust that is a sham, or a trust that the court declares invalid under section 7(2) on a ground that concerns its establishment. And it says nothing about the position of the settlor personally before a foreign court. Each limit is examined below (see infra ¶¶ 1120, 1170).
The approach of this chapter. The chapter sets out the text and structure of section 7 (see infra ¶ 1110); the trusts that section 7(6) protects (see infra ¶ 1120); the three things the court is directed not to do and the meaning of "pursuant to the law of another jurisdiction or the order of a court of another jurisdiction" (see infra ¶ 1130); the marital and succession categories (see infra ¶ 1140); the creditors' category (see infra ¶ 1150); section 7(7) and the statutes it overrides (see infra ¶ 1160); what section 7 does not do (see infra ¶ 1170); the place of section 7 in the wider Act, a comparison with the Cook Islands and Nevis and the cases (see infra ¶ 1180); and the planning and drafting steps that preserve the protection (see infra ¶ 1190).
Sources. The text of section 7 is taken from the Revised Edition 2020 of the Trusts Act, Cap. 202, which shows the law as of December 31, 2020. The Trusts (Amendment) Act 2023, No. 40 of 2023, did not amend section 7, and no later amendment to the section has been identified. The Insolvency and Bankruptcy Act 2025, No. 13 of 2025, repealed the Bankruptcy Act named in section 7(7) but made no consequential amendment to the Trusts Act (see supra ¶ 580.03). No reported Belize decision applying section 7(6) to a foreign creditor has been identified (see infra ¶ 1180.06).