Moore Stephens assets protection trust

Gibraltar's asset protection trust legislation falls within the provisions of the bankruptcy law, rather than within the area of fraudulent conveyancing legislation.
A creditor, therefore, seeking to commence an action in Gibraltar will have his options restricted to attempting to prove an act of bankruptcy in Gibraltar itself.

To obtain protection the criteria required from both settlor and trustee is briefly described below.

DISPOSITION CRITERIA

Section 42 (a)(1) of the Bankruptcy Ordinance of Gibraltar sets out the following criteria which must be satisfied before a disposition shall not be voidable at the instance
of or upon application by any creditor of the settlor. These criteria are as follows:

The property which is the subject matter of the disposition must become settled property, namely property held in or upon trust, not being a mere nomineeship;
The settlor must be an individual;
The settlor must not be insolvent at the date of disposition nor must he become insolvent in consequence of the disposition. For these
purposes an insolvent settlor is one whose liabilities, both actual, contingent or prospective exceed the value of its assets. A claim by creditors is not deemed to be a contingent or prospective liability of the settlor unless at the time of the disposition the settlor had actual notice of such a claim or the knowledge of the facts or circumstances which would render him liable to such a claim;
The disposition must be registered in accordance with the Bankruptcy (Register of Dispositions) Regulations 1990;

The protection afforded by Section 42 (a) of the Ordinance does not have a retrospective effect and applies only from the date of registration of the disposition and
not from the actual date of the disposition.

SUBSEQUENT CONTRIBUTIONS TO A TRUST FUND

The protection afforded by Section 42 applies to
dispositions into a trust and is defined as any disposition or series thereof howsoever affected and includes any transaction, gift, grant or transfer of property of any nature whatsoever.

As stated above the protection afforded by registration pursuant to Section 42 (a) applies to dispositions rather than to a trust deed or structure. As such, each addition to a trust fund by way of subsequent disposition should be registered pursuant to Section 42 (a) (see below).
This will of course require the trustees to confirm that the formalities specified in Section 42 (a) have been satisfied for each subsequent disposition of assets to a trust structure.
3. REGISTRATION

The trustee must be a corporation and must be specifically approved by Gibraltar's Financial Services Commission to act as an APT trustee. To obtain approval the trustee must demonstrate that it has adequate financial and administrative resources to act as an APT trustee and that it maintains an adequate level of indemnity insurance. The trustee must have obtained the prior approval of the Financial Services Commission to its forms of enquiry and procedures prior to acting as a trustee.

Of Disposition

In order to register a disposition as an APT the terms of the proposed Trust Deed must be settled. The deed itself should be stated to be subject to Gibraltar law. That
being said where for instance a U.S. settlor is involved, it is common for the deed to be drafted with a view to such U.S. concepts as the Generation Skipping Tax and the Grantor Trust Rules.

Prior to agreeing to act, a trustee must undertake its own enquiries so as to satisfy itself as to the solvency of the settlor. The trustee will require the settlor to swear a Declaration of Solvency which the trustees will then independently verify with the settlor's legal, accounting and tax advisors. A personal financial summary and due diligence questionnaire will also have to be completed.

Once the Trust Deed, Declaration of Solvency and other due diligence forms have been completed to the satisfaction of the trustee the required particulars will be submitted for registration. The trustees, at this stage, have to give an undertaking that all the necessary requirements and enquiries have been satisfactorily completed.

First Rock Trustees Limited is licensed by the Gibraltar Financial Services Commission to provide company, ordinary trust and asset protection trust management services.

Bernard Hazell - Resident Director - email: bernard.hazell@moorestephens.gi
Cindy Glasby - Legal Compliance Officer - email: cindy.glasby@moorestephens.gi

We believe the information to be correct at the time of going to press but we cannot accept responsibility as a result of acting or refraining from acting as a result of any item herein.