About the International Privacy Trust and Protectors

An International Privacy Trust from the Bahamas can help to reduce taxes and improve asset protection.

The International Privacy Trust is usually used to own the shares of another entity in a more private and confidential manner. It is also useful in establishing a separate taxable entity and to provide advanced asset protection. This is a real advantage since the Bahamas treats such entities as non-taxable as long as they earn no active income in the Bahamas.

The Trust itself is established by Connex International Services LP (or some other entity) and serves as the initial Trustor (forms the Trust), Trustee (manages the Trust), Beneficiary (the ultimate owner of the Trust) and Protector (see description later) of the Trust.

Of the four positions, the Protector is the most important. The Protector has the power to remove and replace the Trustee, and, most importantly, change the Beneficiary. After the trust is established, the old Protector resigns and appoints a new Protector(s) . The Client has the option of naming himself or some other trusted individual as Protector, or name more than one Protector. He or she can also change the Beneficiary at that time or at a later date.

The new Protector is effectively in control of the trust without being listed anywhere in the Trust formation documents. The Client can maintain control over the Trust without becoming either a Trustor, a Trustee or a Beneficiary.

The Protector is the key to the whole system. Under Bahamian law the Protector has the right to supervise what the Trustee does, remove and replace the Trustee, and add and remove other Protectors (depending upon the mechanism put in place inside the Trust). In addition as stated above, the Protector(s) in this Trust also have the right appoint the Beneficiaries.

This is a very powerful position. It essentially controls the Big Picture issues of the Trust without getting into the day-to-day management issues. This is important since most countries will declare a Trust that is essentially controlled by its Grantor/Client a "self-settled trust" or worse a "sham trust", and will strip it of its asset protection and tax reducing value. The Protector prevents this from happening.

In this Trust you are not the Trustor/Grantor/Settlor, the Trustee, or the Beneficiary, all positions that could result in problems. Instead you or your appointee(s) will be the Protector(s), which is all you need to control this Trust since the Trust will never do anything more than hold passive assets, like the shares of a company.

Now you have 3 options:

1. Name yourself as Protector. If you are a citizen of a "European Code" country this should be fine. Under the Code, the powers given to the Protector are considered an "executory contract" or an "options contract". They do not come into force until you actually execute the powers. This would not be wise for someone who is a citizen or resident of a "Common Law" country like the UK, USA, Australia, etc. because these countries interpret the powers of the Protector differently. Those from Common Law countries should only consider options 2 and 3.

2. Name yourself and 2 other people as Protectors. I usually suggest you name me or some other US based attorney as one of the Protectors since under US law I am obligated to either obey your instructions, or resign as Protector. Going against my client in something would result in severe legal problems for me, and could result in loss of my law license or worse. I wouldn´t want that.

3. Name me or some other US based attorney as Sole Protector. This is the default setting for these types of trusts. When this is done, you have all the benefits of having an attorney who is obligated to obey you, but I also provide a conditional resignation letter as added protection. My resignation is subject to you accepting it. All you have to do to make the resignation final is to "accept" the resignation and I am removed and you take my place. This is an ideal situation for people who do not want anyone to know the system is linked to them. Ultimate privacy.

As stated, number 3 is the default setting for this trust. I am named as the Protector and issue to you a Declaration of Protector in addition to the Contingent Resignation. This declaration simply states in clear and unambiguous terms that I am accepting the position of Protector as your attorney, and as such I am bound by the Attorney-Client Relationship to serve in your interests.