Bermuda Homestead Trust

For many individuals and families, it's important to know that a home and other property can be passed on to the next generation with minimal tax erosion. The Bermuda Homestead Trust is designed to help you protect an important family legacy and meet a number of important goals:

• Reducing or eliminating death duties
  
  
• Keeping the property in the family
  
  
• Protecting assets
  
  
• Providing income for elderly or incapacitated family members
  
  
• Providing educational funds for family members
  
  
• Ensuring that there are funds for maintenance of the property
  
  

How does the Bermuda Homestead Trust work?

The trust structures generally used are Discretionary Trusts or Fixed Interest/Income Trusts. Company ownership structures are also used as underlying or overlying vehicles with the trust structure. A trust can assist with good business planning to formalise your commercial interests and utilise appropriate company structures. Companies are typically used for more complex or dynamic structural planning and reporting requirements.

What are the benefits?

• Significant potential tax savings.

Upon the death of a property-holder in Bermuda, there is generally stamp duty (death taxes) payable to the Bermuda Government on the value of the estate, as at the date of death. With a Bermuda Homestead Trust in place, potential long-term savings on stamp duty could be considerable.

• A legacy for the generations that follow.

Stamp duty is payable on a conveyance (transfer) of real estate to a person or to a trust. When real estate is directly purchased by a trust, it eliminates the need of paying stamp duty later or at the time of death because the trust continues to own the property and no transfer of ownership to beneficiaries is needed. The beneficiaries within a trust can be updated and amended as needs change. A trust will outlive the original beneficiaries of the property and, more than likely outlive up to two to three generations or more, depending on the planning.

• Protection for family assets.

Families work hard to acquire assets, with the aim of providing for future generations. A trust structure can protect family assets. The trustees hold legal title on behalf of the beneficiaries. A trust structure fosters continuity planning and ensures that family members are provided for as you intend.

• Professional management.

A professional trustee sees to the administration of the assets on behalf of the beneficiaries. Funds can be set aside and used for specific purposes, such as education, charity or philanthropic causes you are passionate about.

For more information on the Bermuda Homestead Trust, please contact us.

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