Recent practices disclose situations where a settler not necessarily seeking asset protection would set up an International Business Company (IBC) with broad trust powers to administer a trust for the benefit of say, his children. Instead of hiring a separate unrelated and most likely expensive trust company the settler would form his own trust company, This is an important use of IBC’s and is in contrast to the powers granted to corporate entities in the United States. In particular, corporations cannot exercise trust powers in the United States without expensive and elaborate compliance with government regulations. This no doubt destroys confidentiality and is usually cost inefficient. In this case the settler would himself supervise the exercise other trustee’s powers over the trust.
Settler invariably want the knowledge and comfort that they can control the trust without direct ownership should there be an attack from creditors. Hence, when an IBC is used as a trustee for asset protection purposes, it is important for the settler not to own the stock of the IBC. The issue of bearer shares tends to blur the settler’s ownership of the stock, or alternatively nominee shareholders may be utilized.
The most typical holding pattern is for a Belize trust to be created using an IBC as trustee. The trust then holds a majority interest in a limited partnership which is seized of the assets. An IBC is formed which is general partner of the limited partnership and therefore effectively controls, but does not own, the limited partnership and the assets thereof. The IBC general partner in turn is indirectly controlled by the settler through bearer shares or nominees shareholders. The scenario allows the settler to exercise control over the assets by virtue of his status as an officer of the corporate general partners while at the same time the partnership permits separation of ownership from control.