The Nevis International Exempt Trust Ordinance

What makes a trust exempt

The Nevis International Exempt Trust Ordinance 1994 treats international trusts formed in Nevis as "exempt" trusts — that is, freed from a range of local taxes and from some obligations imposed on domestic Nevis trusts. To qualify, three conditions all have to hold. At the point of settlement, none of the beneficiaries can be a citizen or resident of Nevis. The trust property cannot take in any land located in Nevis. And a minimum of one trustee has to be a trust company licensed under the law of Nevis.

Rather than being matters of drafting preference, these are gateway requirements. Should a trust breach even a single one, it does not count as an exempt trust under the Ordinance and enjoys none of its protective features. At onboarding the trustee verifies that all three are satisfied before agreeing to accept the settlement.

The fraudulent transfer provisions

Fraudulent dispositions are dealt with in Section 16 of the Ordinance and the amendments to it. To attack a transfer made into a Nevis trust, a creditor has to establish two distinct matters at once, and to the standard of beyond reasonable doubt: first, that when making the transfer the settlor's principal intent was to defraud that particular creditor; and second, that at the moment of transfer the settlor was insolvent, or was left without enough assets outside the trust to satisfy that creditor's claim.

That principal-intent bar is a high one. Where assets are moved for a blend of reasons — general creditor protection, more efficient asset management, or estate planning — the principal intent test is not met. A creditor has to demonstrate that defrauding this one specific creditor was the settlement's dominant purpose rather than simply one of its outcomes. Layered on top of the criminal standard of proof, this leaves the majority of fraudulent transfer claims effectively impossible to win in practice, even when the transfer happened to occur alongside a dispute the settlor knew about.

The limitation framework

There are two limitation periods in play. The main one begins on the date the cause of action accrued and lasts two years; a creditor who does not bring Nevis proceedings inside that two-year span is completely time-barred. A second period operates as well: any claim brought under the fraudulent transfer rules has to be started within two years of the settlement date. Taken together, these two clocks mean a trust that was settled more than two years ahead of the cause of action is, on the merits or otherwise, all but immune to a fraudulent transfer attack.

See the limitation period page on the way the two clocks work together in practice, and why, by the time most creditors are prepared to act, the window has usually already shut.

The non-recognition provisions

Under the Ordinance, a foreign judgment secured against a settlor carries no force against trust property held in Nevis. That closes off the usual path a judgment creditor uses to execute against assets: the foreign judgment cannot be registered in Nevis or treated as though it carried the weight of a Nevis judgment. Instead, each creditor has to begin afresh through proceedings brought in Nevis under Nevis law.

The Ordinance further states that Nevis law — not the law of wherever the settlor is domiciled — determines both whether a Nevis trust is valid and whether the settlor had the capacity to create it. That stops a foreign court from reaching for its own domestic trust law to decide the trust's validity.

Key amendments since 1994

Since 1994 the Ordinance has undergone several amendments, which have on the whole reinforced the protection it offers. Sitting alongside the Ordinance is the creditor bond requirement, itself a feature of Nevis law. Rather than trusting any one secondary summary — this page included — check the current consolidated text of the Ordinance with an adviser qualified in Nevis.

Any analysis of a statute is inevitably a simplification. Study the Ordinance in its entirety with qualified Nevis counsel before you rely on any of its provisions for planning.