VISTA trusts: FAQs

The Virgin Islands Special Trusts Act (VISTA) offers a unique framework for holding shares in British Virgin Islands (BVI) companies. To clarify the intricacies of this specialised trust regime, we've compiled a list of frequently asked questions. This guide, developed with insights from Raven Kelly, Client Director, and Leevyn Isabel, Commercial Director, provides a clear and concise overview of VISTA trusts, their advantages and practical applications. Whether you're considering succession planning, asset protection or simply seeking a more efficient way to manage BVI company shares, this FAQ will equip you with essential knowledge.

1. What is a VISTA trust?

A VISTA trust is a specialised trust regime under Virgin Islands Special Trusts Act, 2003 designed to facilitate the holding of shares in BVI companies.

2. How does a VISTA trust differ from a traditional BVI trust?

Unlike traditional trusts, where the trustee often has extensive powers over trust assets, a VISTA trustee's role is significantly reduced, with the management of the underlying companies typically vested in their directors.

3. What are the key features of a VISTA Trust?

1. The application of VISTA is restricted to shares in BVI Companies. This means that the underlying company holding the trust assets must be a BVI Company.

2. Designated shares are held on trust to retain. The trustee’s duty to retain the shares has precedence over any duty to preserve or enhance their value. The trustee is therefore not liable for the consequences of holding the shares.

3. Subject to contrary provisions in the trust deed, the trustee may not exercise its voting or other powers to interfere in the management or conduct of any business of the company. The management or conduct of business is left to the directors.

4. The trust deed may include ‘office of director rules’ specifying how the trustee must exercise its voting powers in relation to appointment, removal and remuneration of directors. Except in compliance with these rules, the trustee must generally not take steps to procure the appointment or removal of the company’s directors.

5. Intervention may be permitted by the trust deed in specified circumstances, i.e. when required to so by an ‘intervention call’ by a beneficiary, object of a discretionary power of appointment, parent/guardian or either, the Attorney General, enforcer or other specified persons.

4. What are the key advantages of establishing a VISTA trust?

• Efficiency: Reduced trustee involvement in company management.

• Flexibility: Can be tailored to meet specific asset holding and succession planning needs.

• Asset protection: Potential for asset protection benefits through proper structuring.

• Tax efficiency: Potential tax advantages, though specific tax advice is essential.

5. What are the basic requirements for establishing a VISTA trust?

• A settlor to create the trust.

• A trustee like Ocorian, which must be a licensed BVI trust company or a BVI private trust company.

• A trust deed outlining the terms of the trust.

• A BVI company (or any other company) whose shares will be held by the trust.

6. Can a settlor be a beneficiary of a VISTA trust?

Yes, a settlor can be a beneficiary of a VISTA trust. However, the trust must have at least one other beneficiary.

7. What types of assets can be held in a VISTA trust?

The primary asset of a VISTA trust is shares in a BVI company. However, the underlying BVI company can hold various worldwide assets, including real estate, investments and other assets, subject to applicable international laws.

8. Who can transfer assets into the VISTA structure?

Anyone can transfer assets into the VISTA structure. Unless already specified in the trust deed, no party can gain control over the trust by virtue of transferring assets into it.

9. What is the role of a protector in a VISTA trust?

A protector is an optional role in a VISTA trust. They can have various powers to oversee the trustee's actions and protect the interests of beneficiaries, such as appointing or removing trustees, approving distributions, or vetoing certain actions.

10. What are the duties and responsibilities of a VISTA trustee?

A VISTA trustee's role is primarily custodial. Their duties include holding the trust assets (shares in the BVI company), ensuring compliance with the VISTA Act, and acting in the best interests of the beneficiaries. However, unlike traditional trusts, the trustee typically has limited involvement in the management of the underlying company.

11. Can the terms of a VISTA trust be amended or revoked?

The ability to amend or revoke a VISTA trust depends on the specific terms of the trust deed. Generally, the trust deed should outline the procedures for making changes to the trust.

12. What happens to a VISTA trust upon the death of the settlor? 

This will depend upon the provisions of the trust deed. Upon the settlor's death, the VISTA trust continues to exist. The trustee manages the trust assets according to the trust deed's terms, and distributions are made to beneficiaries as specified in the trust instrument.

13. Can creditors reach VISTA trust assets?

The ability of creditors to reach VISTA trust assets depends on several factors, including:

• The jurisdiction of the creditor.

• The nature of the creditor's claim.

• The specific provisions of the VISTA trust deed.

• The actions taken by the trustee to protect the trust assets.

14. How can a VISTA trust be used for succession planning?

A VISTA trust can be an effective tool for succession planning. It provides a framework for transferring assets to future generations while maintaining control over the underlying assets through the BVI company. The trust deed can outline the distribution of shares to beneficiaries, and the VISTA structure allows for flexibility in managing the assets after the settlor's death.

15. What are the disclosure requirements for VISTA trusts?

VISTA trusts generally enjoy a high degree of confidentiality. However, there may be disclosure requirements in specific circumstances, such as tax reporting, legal proceedings, or requests from regulatory authorities.

16. What are potential uses of a VISTA Trust?

• Holding shares in trading companies: VISTA trusts are ideal when trust assets consist of shares in active trading companies. They ensure that the company's management remains in the hands of its directors, who possess the necessary expertise. The trustee's role is restricted, preventing them from unilaterally selling shares without required approvals, thus maintaining business continuity.

• Settlor retention of control: For settlors who wish to maintain control over asset management, particularly investment decisions, a VISTA trust provides a suitable framework. The settlor can act as a director of the underlying BVI company, effectively retaining managerial responsibility without undue trustee intervention.

• Managing high-risk investment portfolios: VISTA trusts are well-suited for holding high-risk investment portfolios, such as those involving futures, options, or commercial ventures. By limiting the trustee's intervention, the trust mitigates the risks associated with the trustee's potential need to enforce conservative investment strategies.

• Preserving specific assets: When settlors intend to preserve specific assets, such as family heirlooms or shares in family companies, a VISTA trust can ensure their retention. The trust deed can prevent the disposal of these assets without the required consent, guaranteeing that they remain in trust until distribution to beneficiaries.

How can Ocorian help?

VISTA trusts provide a robust and flexible framework for managing BVI company shares, offering distinct advantages for succession planning, asset protection, and controlled management. By understanding the nuances of VISTA trusts, individuals and families can leverage this specialised structure to achieve their long-term financial and estate planning goals. This guide has aimed to clarify the key aspects of VISTA trusts, but as each situation is unique, professional guidance is always recommended.

At Ocorian, we possess the expertise and experience to guide you through the complexities of establishing and managing VISTA trusts. Our team of specialists can tailor solutions to your specific needs, ensuring your assets are protected and your succession plans are effectively implemented.