BERMUDA Law and Practice Contributed by: E Scott Swainson, Katrina Dickson and Erik Gotfredsen, Wakefield Quin Limited
Trusts Trusts are typically used where owners are old - er, in order to avoid death taxes or because the owner holds other land and typical exemptions are spoken for. They also offer asset protection against personal liability. Land holding trusts may exist for 100 years. Appointments from trust to a beneficiary attract only nominal stamp duty, so trusts are easily dissolved. Number of Trustees Land holding trusts typically have two individual trustees or a single trust corporation, acting as trustee on the terms of a written settlement. Fully licensed trust corporations are able to hold land as trustee without landholding sanctions and can move quickly compared to companies. Companies Companies need landholding powers for most land acquisitions, and this typically takes six to 12 weeks to secure. In addition, the landholding consent (when issued) will contain conditions and require the company to dispose of the land within three years if the business justification relied upon in the application ceases to apply. Such conditions do not apply to trusts. Com - panies tend to be useful when there is a mix - ture of unrelated shareholders who need a set framework to govern relations, and when trusts (which involve a certain amount of discretion) are less suitable. Companies must file annual returns and pay annual government fees, and can be struck off for non-compliance. Corporations Condominium corporations are formed under statute (when a suitable plan is registered with the Bermuda government under a specialised process). They are relatively rare and statutory
investigate and can issue an enforcement notice. The Director of Planning can also issue “stop work” order during construction. Practical Concerns As most new development cannot be occupied without final inspections and there are many interim inspections, breaches are often flagged early in any build and can be remedied. The penal nature of the system regarding retroactive approvals (and fines and penalties that may be levied) mean that it is never a good idea to pro - ceed with unauthorised work and ask forgive - ness. Revisions are normally addressed quickly. 5. Investment Vehicles 5.1 Types of Entities Available to Investors to Hold Real Estate Assets Real estate is commonly owned by individuals, trustees/trust corporations or (in the case of commercial property) a company/corporation. 5.2 Main Features and Tax Implications of the Constitution of Each Type of Entity Individuals Individuals may act as both legal and beneficial owners. Joint owners may own as joint tenants (survivorship applies) or tenants in common (interests are divisible and pass via the estate of the deceased). Individual ownership offers the most control. There are no limits on the number
of co-owners. Death Duties
Stamp duty is paid on the affidavit filed to secure a grant of probate. It applies to the value of all Bermuda assets minus accumulated Bermuda liabilities. Exemptions and exclusions apply.
172 CHAMBERS.COM
Powered by FlippingBook