The Trusts (Special Provisions) Amendment Act 2020 (Bill) was tabled in the House of Assembly on 3 July 2020. The Bill seeks to amend the Trusts (Special Provisions) Act 1989 (Principal Act) to clarify the jurisdiction of the Supreme Court in respect of Bermuda trusts and foreign trusts with a connection to Bermuda; to enhance and modernise provisions of the Principal Act with regard to the application of foreign laws and foreign orders to Bermuda trusts; and to make consequential amendments to the Conveyancing Act 1983.

The Bill, once it becomes operative, is intended to make the following amendments to the Principal Act:

  • New section 1A – To improve certain definitions in the Principal Act such as “foreign court” (to cover foreign arbitration and other tribunal determinations), “foreign order” (to include interim or final judgments, awards, orders or other decisions of a foreign court), “settlor” (to include the testator of a will trust and the settlor/trustee of a declaration of trust). Of particular importance in the context of firewall provisions is a new definition for ”Bermuda trust”, as it has been specifically tailored to allow for the possibility that Bermuda law may apply to a severable part of a trust only, in accordance with section 8 of the Principal Act;
  • Amend section 2A – To repeal section 2A(9) pertaining to the definition of settlor which is now provided under the new section 1A.
  • Amend section 6(2) – To provide for the use of the term ‘Bermuda trust’ and to extend to the provision the inference that a trust may be governed by Bermuda law only in part.
  • Amend section 9 – To repeal and replace section 9 in order to specify that the Supreme Court has the power to adjudicate claims concerning the validity, construction, effects of administration of the trust, including any of the matters set out in section 7(a)-(j) of the Principal Act. The new section is intended to enhance the provisions of the current section and is also considered an improvement on the provisions of competitor jurisdictions as it provides for the express jurisdiction of the Supreme Court where the trust instrument provides for it.
  • Amend section 10 – To repeal and replace section 10 in order to enhance the effectiveness of firewall protections under that section. It has been recognised that the current sections 10 and 11 of the Principal Act embodying the firewall protections, can be improved. The revised approach as contained in the new section 10 is intended to provide for an exclusion of foreign law where appropriate as opposed to providing for a blanket application of Bermuda law, subject to exceptions. This is accomplished by specifying the circumstances under which any foreign law shall be excluded from application to a Bermuda trust. The new section 10(3) will clearly state that no foreign law shall apply to the determination of any question concerning the validity, construction, effects or administration of a Bermuda trust. This will include any matters concerning the appointment of trustees, rights and duties of trustees, powers of delegation, investment and accumulation of income, duration of the trust, relationship between trustees and beneficiaries and any liability, variation or termination of the trust and distribution of trust assets. The firewall protection afforded under the new section 10 will not apply to foreign land or in cases where foreign law has been chosen to apply to any severable aspect of a Bermuda trust in accordance with section 8 of the Principal Act.
  • Amend section 11 – To repeal and replace section 11 in order to supplement the protective measures under the new section 10 by preventing the enforcement or recognition of any order of a foreign court where such order is in conflict with the provisions of the new section 11.
  • Consequential amendment – To repeal and replace section 36G of the Conveyancing Act 1983 (Bermuda’s fraudulent transfer legislation) so as to simplify the language and to allow for consistency with the updates to the firewall provisions of the Principal Act. This will clarify that Bermuda’s fraudulent transfer legislation will not enable a creditor’s claim if the claim is precluded by Bermuda’s firewall provisions.

The legislative amendments clarify Bermuda’s application of foreign laws and foreign orders to Bermuda trusts so as to ensure that Bermuda remains a competitive jurisdiction for trust structures.

Where a Bermuda trust is properly constituted, the so called “firewall” provisions are intended to (a) protect against foreign law application relating to heirship rights, matrimonial/other familial relationship, or matters of insolvency, to the determination of any question concerning a Bermuda trust, (b) exclude the application of foreign law to questions relating to the validity, construction, effects or administration of a Bermuda trust, and (c) prevent the enforcement of foreign orders in relation to property held in a Bermuda trust (with the exception of immovable property outside Bermuda), which are inconsistent with Bermuda law.

The Bill requires passing through the Senate and Royal Assent from the Governor of Bermuda before it becomes operative.

Share
Twitter LinkedIn Email Save as PDF
More News
6 Aug 2020 | News

Offshore Business Update

This is an update for our clients on how the authorities in our core jurisdictions are responding to...

4 Aug 2020 | News

Bermuda launches new one-year ‘Work From Bermuda’ residency initiative

Bermuda is now offering one-year residency for those who want to work or study remotely. Effective ...

24 Jul 2020 | News

Appleby Bermuda announce 2020 Scholarship and Bursary Recipients

For the last 40 years, the Partners of Appleby in Bermuda have provided scholarships and bursaries t...

14 Jul 2020 | News

Appleby Receives High Rankings in Chambers’ Annual High Net Worth Guide

Lawyers from Appleby’s Bermuda, Cayman Islands and Jersey Private Client & Trusts practices ha...

8 Jul 2020 | News

Appleby releases Offshore Data Protection Guide

Leading offshore law firm Appleby announces today it has launched an Offshore Data Protection Guide ...

6 Jul 2020 | News

Appleby Global Services announce new leadership team

Appleby Global Services (AGS) a global fiduciary services provider which was launched by offshore la...

2 Jul 2020 | News

Covid-19: Protecting Personal Data – the New Normal

One unanticipated consequence of the COVID-19 pandemic has been the huge increase in the collection ...

19 Jun 2020 | News

Appleby partners with ‘Collision From Home’

Appleby is partnering with Collision, North America’s fastest-growing tech conference, to showcase...

17 Jun 2020 | News

Considerations for Trustees during COVID-19

Who saw a global pandemic coming in 2020?  Was anyone ready for it?  And could anyone have predict...

16 Jun 2020 | News

Brad Adderley speaking on ILS webinar hosted by RIMS and the BDA

The Bermuda Business Development Agency has partnered with the prestigious Risk Management Society t...