Virgin Islands Pot Testamentary Trust
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How to fill out Pot Testamentary Trust?
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FAQ
The trust can also be used to reduce estate tax liabilities and ensure professional management of the assets. A disadvantage of a testamentary trust is that it does not avoid probatethe legal process of distributing assets through the court.
The major disadvantages that are associated with trusts are their perceived irrevocability, the loss of control over assets that are put into trust and their costs. In fact trusts can be made revocable, but this generally has negative consequences in respect of tax, estate duty, asset protection and stamp duty.
How does it save tax? A testamentary trust allows the person who controls it to split the income generated by the trust between family members. Importantly, children who receive income from a testamentary trust are taxed at adult tax rates, instead of penalty rates (up to 66%) which apply to other types of trusts.
The major benefit of a trust is that it gives the settlor control over when and how his or her assets are disbursed. This is especially important for settlors who have young children or grandchildren. With a testamentary trust, assets can remain protected until the child is old enough to be financially responsible.
Currently, taxable income earned in a testamentary trust is subject to the same graduated tax rates as an individual taxpayer (this is subject to change after December 31, 2015).
It enables a settlor to transfer shares in a BVI registered company to a BVI licensed trustee (which for these purposes would include a BVI private trust company) of a trust established in accordance with the formalities prescribed by the VISTA Law.
A testamentary trust allows the person who controls it to split the income generated by the trust between family members. Importantly, children who receive income from a testamentary trust are taxed at adult tax rates, instead of penalty rates (up to 66%) which apply to other types of trusts.
Who may be trustees? Any individual, being an adult who has legal capacity may be a trustee. For a BVI company to be a corporate trustee, it must obtain a licence to carry on trust business under the BVI Banks and Trust Companies Act, 1990 unless it qualifies as a private trust company (see Part 2 below).
You can name your own testamentary trust as your beneficiary by including it on the beneficiary form in the following format. You cannot name someone else's testamentary trust.
Benefits of a Testamentary TrustThese Trusts can protect assets against legal action or potentially irresponsible financial decisions made by beneficiaries. Income Tax Perks: Testamentary Trusts do not require beneficiaries to pay taxes on income distributed from the trust.
