¶ 601
Overview
Scope. This chapter examines what is required to bring a valid Belize trust into existence and to keep it in good standing from the day it is created. It covers the statutory definition of a trust and the grounds of invalidity; the certainties of intention, subject matter and objects; the modes of creation and the formalities that apply to each; the capacity of the settlor; the constitution of the trust by the vesting of property in the trustee; the distinction between domestic and international trusts; the two registration regimes; and the record-keeping and reporting duties that attach at formation and continue throughout the life of the trust. It closes with the essential terms of a trust instrument and a formation checklist. The history and structure of the Trusts Act are described in chapter 5, and the protective provisions of section 7(6) are examined in chapter 11 (see supra ch. 5; see infra ch. 11).
Two layers of rules. The Trusts Act sets its formation rules in two layers. The first is the general law of trusts in Parts I to IX, which applies to every trust whose proper law is the law of Belize and, in the case of sections 1 to 4 and 7, to every trust the Belize court is asked to consider. Trusts Act s. 66(3). Those Parts are permissive. A trust, other than a unit trust, may be created orally, in writing, by conduct, by operation of law "or in any other manner whatsoever," and no formalities or technical expressions are required where the settlor's intention to create a trust is clearly manifested. Id. s. 5(1), (3). The second layer is the registration and administration regime in Parts X and XA. It is prescriptive. An international trust may be created only by an instrument in writing, signed by the settlor and the trustees and authenticated before a notary if signed outside Belize; it must have a licensed trust agent resident in Belize; and it must be registered with the Registrar of International Trusts within ninety days of its creation. Id. ss. 65, 65B(1), 65E. A domestic trust in writing must be registered on the Domestic Trust Register within fourteen days. Id. s. 63A(1). Where the two layers conflict, Part XA prevails. Id. s. 64(3).
Why formation matters more in Belize. In most common-law jurisdictions a defect in formation affects the trust's validity as between the parties, and a creditor who wishes to rely on it must prove it. Belize adds a statutory consequence that has no general counterpart elsewhere. The protection of section 7 applies to an international trust "only" where the trust is duly registered, and an international trust which is not so registered "shall be invalid and unenforceable." Id. s. 65B(7). Registration is therefore a condition of the trust's existence as an international trust and of the non-recognition rule on which its protective value rests (see infra ¶ 660.05; ch. 11). The planner who forms a Belize international trust must treat each formation step as one on which the protection depends, and must be able to prove each step later, before a court that may be examining the trust years after it was settled.
The 2023 amendments. The Trusts (Amendment) Act 2023 changed the formation rules in three respects that this chapter examines in detail. It replaced the definition of an international trust, so that at least one trustee must be a company incorporated under the Belize Companies Act or a licensed trust company doing business in Belize, and the choice of Belize law is no longer an element of the definition (see infra ¶ 650.03). It imposed detailed duties to keep accounts, records and identification information in Belize, to disclose trustee status to reporting entities and to file an annual attestation on beneficial ownership (see infra ¶ 680). And it gave the Registrar power to inspect domestic trust records and to impose administrative fines of up to one hundred thousand dollars. Trusts (Amendment) Act 2023, No. 40 of 2023, ss. 2–6, 9–11 (assented to Sept. 5, 2023; gazetted Sept. 6, 2023). The Financial Services Commission gave licensees, trustees and other reporting entities until December 31, 2023 to comply. Fin. Servs. Comm'n, Public Notice FSC/LC/55/27 (Sept. 22, 2023).
Sources. This chapter relies on the Trusts Act, Cap. 202, Revised Edition 2020; the Trusts (Amendment) Act 2007, No. 9 of 2007, which inserted Part XA; the International Trusts Regulations 2007, S.I. 68 of 2007; the Trusts (Amendment) Act 2023; and the Commission's public notices. Belize is not a party to the Hague Convention on the Law Applicable to Trusts and on their Recognition (see supra ¶ 410.06), so the formation and recognition of Belize trusts rest on the Act and on the common law received in Belize (see supra ch. 2). The Act calls the court "the Supreme Court," which the Senior Courts Act 2022 restyled the High Court; this chapter refers to it as the Court (see supra ch. 2). Trusts Act s. 67(1).
Plan of the chapter. Paragraph 610 examines the definition of a trust, the grounds of invalidity and the three certainties. Paragraph 620 examines the modes of creation and the formalities, including the special rules for international trusts. Paragraph 630 examines the settlor and the settlor's capacity. Paragraph 640 examines the constitution of the trust and the transfer of particular kinds of assets to the trustee. Paragraph 650 examines the distinction between international and domestic trusts. Paragraphs 660 and 670 examine the two registration regimes, and paragraph 680 the continuing record-keeping and reporting duties. Paragraph 690 sets out the essential terms of the instrument and a formation checklist.