¶ 2701
Overview
Purpose of the chapter. The preceding chapters examine the Belize trust, the Belize LLC, the Belize company and the Belize foundation one at a time, and then the law that governs claims against them in Belize and abroad. This chapter brings that material together for the planner who must design a structure for a particular client. It proceeds in the order in which the work is done: identifying the client's objectives and the threats to them (¶ 2710), choosing the vehicles (¶ 2720), combining them (¶ 2730), timing the transfers and documenting solvency (¶ 2740), allocating control among settlor, protector and trustee (¶ 2750), deciding where the assets are to be held (¶ 2760), administering the structure so that its protection is preserved (¶ 2770), meeting United States reporting obligations and planning the exit (¶ 2780), and learning from the structures that have failed (¶ 2790). Each step draws on the detailed treatment elsewhere in the book, to which the cross-references point.
The protective core. Three statutory rules carry most of the weight in a Belize structure. The first is section 7(6) of the Trusts Act, which directs the Belize court not to vary or set aside a trust created under Belize law, or to recognise any claim against the trust property under foreign law or a foreign order, in respect of marriage, succession or "the claims of creditors in an insolvency." Trusts Act, Cap. 202, s. 7(6). Insolvency in paragraph (c) is a financial condition, and the paragraph therefore reaches the fraudulent-transfer claims of ordinary creditors of a settlor who is not paying his debts, as well as claims made in a bankruptcy; section 7(7) confirms the reading by providing that subsection (6) prevails over section 149 of the Law of Property Act (see supra chs. 11, 23). The second is the group of provisions in the LLC Act that confine a member's creditor to a charging order, bar the disregard of the LLC and deny effect in Belize to foreign judgments against the LLC or its members. LLC Act, Cap. 270:01, ss. 34–38 (see supra chs. 16, 17). The third is the group of provisions in the Foundations Act that exempt the endowment from the claims of the founder's creditors, exclude foreign law and confine any challenge to a Belize-law claim with short limitation periods. Foundations Act, Cap. 24:02, ss. 79(2), 83, 96, 98 (see supra ch. 21).
What the statutes cannot do. The statutes govern what a Belize court will do. They do not govern what a foreign court will do with the persons and property within its reach. An American court may apply its own law to a Belize trust, order the settlor to repatriate assets and hold him in contempt if he does not, and execute its judgment against any asset located in the United States (see supra ¶¶ 1180.06–1180.09; see supra ch. 26). A Belize structure protects the property that is held outside the foreign court's reach by persons who are outside its reach, for a settlor whose conduct gives the foreign court no ground to punish him. Most of this chapter is concerned with arranging those facts, because the statutory protection is only as effective as the facts to which it is applied.
Three design principles. The chapter applies three principles throughout. The first is separation: the persons who control the protected assets, and the assets themselves, should be outside the jurisdiction of any court in which the client may be sued. The second is timing: a structure established and funded while the client is solvent and no claim is foreseeable is far stronger, in every court, than one funded in the face of a claim. The third is regularity: a structure that is registered, administered and reported as the statutes require keeps its statutory protection, and one that is neglected may lose it, as a trust that is not registered loses section 7 altogether (see supra ¶ 660). The paragraphs that follow apply each principle to the design decisions in turn.
Sources. This chapter relies on the statutory texts and authorities examined and cited in chapters 5 to 26, and restates them only so far as the design question requires. It cites the earlier treatment for the detail. Examples use fictitious clients whose circumstances are typical of the matters for which Belize structures are used. United States tax and reporting rules are noted only in outline, and chapter 30 treats them in full (see infra ch. 30).
Organisation of the chapter. Paragraph 2710 examines objectives and the assessment of threats. Paragraph 2720 summarises the choice of vehicle, which chapter 22 examines in detail. Paragraph 2730 describes the standard combinations, with diagrams. Paragraph 2740 addresses timing, solvency and the limitation and vulnerability periods that run against a creditor. Paragraph 2750 addresses control, protectors and duress provisions in light of the American contempt cases. Paragraph 2760 addresses the location and custody of assets. Paragraph 2770 sets out the administration that preserves the protection. Paragraph 2780 addresses United States reporting and the exit from a structure. Paragraph 2790 draws lessons from the failures in the reported cases and closes with a decision table and a master checklist.