Seychelles international trust: Types, benefits and key parties.

The Seychelles international trust is a flexible and secure structure designed for estate planning, asset protection, and succession. Governed by the Trusts Act of 2021, it offers strong legal safeguards, confidentiality, and tax neutrality.

This guide explores how Seychelles trusts work, their key participants, and why they are a preferred choice for international clients seeking wealth protection and long-term planning.

What is a Seychelles international trust?

An international trust, as defined by Seychelles law, is a trust or constructive trust that meets the following criteria:

• The settlor must not be a resident of Seychelles throughout the trust’s duration.
• At least one trustee must be a licensed company under the International Corporate Service Providers Act authorised to provide international trustee services. The trust can include any assets except property in the Seychelles or shares, debentures, or interest in entities from countries other than Seychelles, including international business companies or other international trusts.

However, under certain conditions and with approval from the authority, a trustee may own immovable property required for office accommodation, invest in securities and other investments in Seychelles and maintain a financial institution account for international trust operations.

Types of Seychelles international trusts

Seychelles international trusts are considered irrevocable by default, providing a higher level of asset protection as the assets are placed under the control of a trustee, and changes cannot be made once it is established. However, the jurisdiction also allows the creation of revocable trusts, granting the settlor the flexibility to modify or terminate the trust. Many international trusts adopt a discretionary structure, giving the trustee discretionary powers to determine how the assets are distributed among the beneficiaries.

The Seychelles International Trusts Act specifies several trust categories, including charitable international trusts, purpose international trusts and other trusts such as commercial, life insurance and cash deposit trusts.

Parties involved in Seychelles international trusts

Settlor

The settlor is the individual who creates the trust by contributing trust property or through a testamentary disposition. They can take on the roles of a trustee, beneficiary, or protector but cannot be the sole beneficiary or trustee.

Trustee

The trustee is responsible for managing trusts in accordance with the trust deed and has a fiduciary duty to diligently care for the trust property for the benefit of the beneficiaries.

Beneficiary

All individuals or companies that the settlor appoints to receive benefits, such as cash or other assets, are considered as beneficiaries.

Protector

While not mandatory, the protector, appointed by the settlor, supervises the trustee and adds an extra level of assurance for asset management.

Settlor’s wishes

Whilst the trustees administer the trust at their discretion, a letter or expression of Wishes is commonly provided by the settlor, setting out his or her wishes in relation to administration of the trust, including with respect to distributions, timing of distributors, deletion or substitution of beneficiaries.

Though not bound by the expression of wishes the settlor’s wishes are commonly respected so as to ensure that the legal integrity of the trust (in terms of its aim to assist the proposed beneficiaries) is maintained.

Trust requirements

To register the trust, the following are required:

• File a brief declaration by the trustee with the registry, declaring that:
  • The settlor of the trust is a non-Seychelles resident.
  • The trust property does not include any land in Seychelles.
  • The name and date of the trust.
• A Seychelles trust must be administered by a Seychelles Licensed Trustee.
• Non-resident co-trustee(s) and/or protectors must be appointed
• The settlor(s) can also be a beneficiary of the trust (but not a sole beneficiary)
• The settlor cannot at any time during the duration of the trust be a resident of Seychelles
• The Act requires a beneficiary of a trust to be:
  • Identifiable by name
  • Ascertainable by reference to either:
    • A class
    • A relationship to another person, whether or not living at the same time of the creation of the trust of at the time by reference to which, under the terms of the trust, members of a class are to be determined. Some examples of unnamed beneficiaries – where the trust deed includes as a beneficiary the settlor’s children and remoter issue, and the spouses, widows and widowers of the settlor’s children.

Trust establishment process

1. The first step is drafting the Trust Deed, a document outlining the trust’s establishment and terms and conditions. It also includes the trustee’s role, duties, beneficiaries’ names and trust assets.
2. Once the trust deed has been agreed upon, the next step is registering the trust.
3. A fee of USD 150 must be paid to the Registry.
4. The international trust will receive a numbered registration certificate upon correct filing and payment.

Features and benefits of Seychelles trusts

Other features of Seychelles Trusts include:

• A Seychelles Trust pays no taxes in Seychelles on its foreign income.
• A copy of the Trust Deed is not required to be filed with the Registry.
• A Seychelles trust can own property anywhere in the world (except for land in Seychelles; although it can own shares and/or maintain bank accounts in Seychelles).
• The Settlors or Trustees can themselves be Beneficiaries of the Trust.
• Someone resident outside Seychelles may be appointed as a co-Trustee.
• There is no requirement to mention the names of the Settlor or the final Beneficiaries in the Trust Deed.
• The transfer of Property to a Seychelles Trust cannot be overturned by any foreign laws as to forced heirship.
• A Seychelles Trust cannot be voided by reason of a Settlor becoming bankrupt.
• The only way that a Settlor’s creditors can attack a Seychelles Trust is by commencing legal action against the Trustee in the Seychelles Supreme Court seeking to have the Trust declared a sham.
• Any legal action to claw back assets transferred to a trust, must be brought within two years of the date of transfer of the disputed asset to the Trust.
• There is a 100-year limit on the length of the trust at which time the law provides that the trust will then terminate, unless terminated earlier either pursuant to the trust terms or for any other reason (charitable trusts or purpose trusts expected).
• Seychelles trusts can migrate and can be administered from Seychelles of elsewhere.
• The terms of a trust may also provide for a change in the proper law of the trust, but a change is only valid if the new proper law venue recognises the validity of the trust and the interest of the beneficiaries.

Confidentiality

The trust deed is not a public record, and the disclosure of the international trust’s information or documents is prohibited by law unless a request is made by the beneficiary or to the extent allowed by the terms of the trust.

Taxation and accounting records

Under Seychelles law, international trusts are exempt from business, estate, inheritance, succession, gift tax and stamp duty as long as the income is sourced outside of the jurisdiction.

The trustees must maintain accurate accounting records, ensuring transparency and accountability. The records must be kept for a minimum of seven years. Licensed trustees must create an annual financial summary within six months of the trust’s financial year-end. If the records are kept outside of Seychelles, they must be submitted to the trustee’s principal place of business in Seychelles and available to local authorities when requested.

Why use a trust?

Trusts are very common and play a role in many aspects of everyday life. In the UK, for example, most company pension schemes are structured as trusts, with the employer (who in this case is the settlor) giving cash to a pension fund manager (the trustee) to invest for the benefit of employees when they retire (the beneficiaries). The trust structure helps clarify the administration, regulation and taxation of the pension fund.

Trusts in insurance and tax planning

Similarly, many life insurance policies are written in trust so that when the person insured dies the policy pays out to a trust run by the insurer, which then pays the cash out in line with the insured person’s wishes.

The trust structure both helps minimise inheritance taxes (see more on this in the section on trusts and taxes) and ensures that the deceased’s wishes about how the insurance funds are to be distributed can be followed quickly and accurately.

Trusts for charitable giving

Trusts are also very commonly used for charitable funding (in the US foundations are also often used for similar purposes). One of the great advantages of the trust structure for charitable funding is that the person setting up the trust can simply indicate how they wish the funds to be used (for example, for medical research), but leave it to the trustees to decide over time which medical research projects should be funded. This highlights the benefit of the flexibility inherent in trust structures when someone is making long-term commitments.

Trusts in family financial planning

For most people, however, the type of trust they are most likely to be asked to make decisions about personally is a trust established to arrange their family’s financial affairs. In this context, the main attraction of trusts is that they give the settlor greater confidence in how assets will be used in the future. Put simply, trusts offer a means of holding and managing money or property for people who may not be ready or able to manage it for themselves. Indeed, trusts can be created to benefit people who are not even born yet – such as any future grandchildren someone may have.

Some of the most common family situations where trusts are used (often in conjunction with a will) are:

• To provide for a husband or wife after death while protecting the interests of any children
• To protect the inheritance of young children until they are old enough to take responsibility for their own efforts
• To provide for vulnerable relatives who are unlikely to be able to look after their own affairs
• To help succession planning in family businesses

Trusts are particularly useful when planning how money and assets should pass from one generation to another, especially when family structures are complicated by divorces and second marriages. This, coupled with the growing frequency of marriage breakdowns, may explain the huge increase in popularity of trusts in many countries. In the US, for example, the number of domestic trusts filing for tax each year has doubled since the mid 1970s.

Conclusion

The Seychelles international trust’s distinctive features, such as irrevocable structures, discretionary power and a number of trust types, satisfy a wide range of requirements. Furthermore, its tax-exempt status is a major benefit, allowing assets to grow tax-free on foreign-sourced income. This beneficial tax policy, combined with the Seychelles international trust’s dedication to confidentiality, makes the Seychelles international trust an even more appealing option for those looking to preserve and protect their assets.

How Acclime can help you establish a Seychelles international trust

With Acclime’s expertise in corporate services, we provide invaluable support to businesses seeking to capitalise on the advantages of offshore jurisdictions. Our professional team understands the intricacies of Seychelles’ regulatory landscape, ensuring seamless compliance with local laws and regulations. If you are seeking to establish a trust in Seychelles, do not hesitate to contact us.