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This article seeks to expound and evaluate the statutory provisions in the British Virgin Islands (“BVI”) Trustee Act (the “Trustee Act”) allowing for the establishment of purpose trusts. Section 84 was inserted into the Trustee Act by the Trustee (Amendment) Act 1993 and came into effect on 1 November 1993. Its provisions were very closely modelled on part II of the Bermudian Trusts (Special Provisions) Act 1989 and created, for the first time, a statutory basis for the establishment of purpose trusts in the BVI. The Trustee (Amendment) Act 2003 introduced section 84A into the Trustee Act to govern statutory purpose trusts created on or after 1 March 2004. This article examines in depth three validity conditions that are common to sections 84 and 84A and the significance of the dropping of a fourth in relation to section 84A trusts.
In doing so it establishes some ground rules for what may and may not be achieved under each section in respect of philanthropic, family and commercial trusts. The later sections of the article argue in particular that section 84A was intended to allow a settlor to achieve what is achievable under part VIII of the Cayman Trusts Law (“STAR”) namely the establishment of a trust for people or purposes or both with an enforcer having the exclusive right to enforce the trust and hold the trustee to account. Some concluding observations are offered on the thorny question of whether a trust to “hold and retain” property states a valid purpose, a matter of considerable significance for the drafting of trusts of shares in the commercial and private trust company contexts. The conclusion argued for is that such trusts do not alienate the equitable interest.
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Legislating on Purpose: A Critical Evaluation of Statutory Purpose Trusts in the BVI