International Protector Group, a trust and estate planning consultancy, rolled out a family office service in November designed to help high-net-worth families and their advisors set up wealth protection structures using new legislation in the Bahamas.
That legislation, the Bahamas Executive Entity, came into force in February. It is designed to act as a shareholder of a private trust company, according to an analysis in The Bahamas Investor.
A BEE does not have beneficiaries or shareholders, but has the full executive powers of a purpose trust. It can act as a shareholder in a mutual trust or fund, as well as a protector and trust enforcer.
The advantage of this structure is that because it does not require shareholders, there is no need for an individual to assume fiduciary or legal responsibility.
“In the past, it has made sense to keep family assets in a complex spread of trust funds and investments,” IPG’s chief executive Andrew Law said in a statement. “The introduction of the BEE allows family interests to be consolidated using a single entity that provides the families with much more on-going security and control.”
Besides acting as a shareholder or owner of a private trust company, a BEE may be able to act as protector in an international fund or foundation in place of individuals held personally responsible in court.
A BEE may also serve as an investment advisor to a family office or a shareholder in alternative investment vehicles.
Law told The Bahamas Investor that IPG had so far set up some two dozen BEEs for American and European clients. He said that as law firms and family offices become familiar with these structures, he expected their use to become much more wide spread, especially among wealthy Asian families.