Understanding succession planning solutions in the BVI – Part 1

The British Virgin Islands (“BVI”) is a leading jurisdiction for the establishment and management of companies and trusts. The “VISTA” trust offers a form of trust unique to the BVI which is particularly attractive for holding shares in BVI incorporated companies. Additionally we are seeing many more clients making enquiries about the benefits of having a BVI Will to deal with the shares they own in a BVI company on their passing. Over the past few weeks, in the midst of the COVID-19 crisis, we have received many inquiries and questions regarding  pragmatic options for cost effective succession planning. As a result, we are going to publish a series of pieces on some practical issues that arise around succession planning and that should be considered, in the hope of creating a greater understanding and awareness. In this piece we will highlight some typical queries we are being confronted with regularly.

What is forced heirship and when do forced heirship rules apply?

Forced heirship determines which heirs are entitled to receive the assets of a deceased person. The rules vary from country to country, but in essence, where forced heirship rules apply, an individual cannot freely dispose of their assets as they see fit; the entitled heirs are determined by the applicable forced heirship laws in force.

Forced heirship is subject to legal restraints depending on the jurisdiction and various laws impose different restrictions. When families don’t carefully structure and plan their succession, forced heirship can lead to complex situations.

What assets can be affected?

In the  BVI, shares in local companies are classified as moveable property for succession purposes. This means BVI legislation treats the law of the country in which the deceased was domiciled as the governing law. If the individual is domiciled in a country where forced heirship rules apply, those rules will apply to their BVI company shares. However this may be able to be overcome through the use of a BVI trust. The BVI has very well drafted trust law dealing with forced heirship issues.

What solutions for succession planning are available to me?

There are various solutions available in the BVI:

  • Establish a BVI will
  • Use of reserve directors
  • Hold  shares in joint tenancy
  • Establish a BVI Vista Trust
  • Establish a regular trust
  • Set up a Private Trust Company
  • Set up a company with “cascading shares”

How can AMS Financial Group help? 

AMS Financial Group (www.amsfinancial.com) is a global, dynamic organization with offices in the main financial centers, a strong infrastructure, know-how, staff and vision that provides real time solutions to both corporate and private clients as well as the asset management industry. We’ve learned that it is important to consider the pros and cons of using a “cheap and cheerful” solution, which might not be the best solution in the long term. By engaging with AMS professionals, many clients have been able to find the appropriate solution for their specific requirements.

We will discuss each of the solutions set out above in this series. Should you need information on our solutions please do not hesitate to liaise with your usual contact at AMS Financial Group.