The laws of The Bahamas recognize creation of an Authorised Purpose Trust, which is a unique type of trust with a non-standard beneficiary. In fact, Authorised Purpose Trusts usually do not have a single named beneficiary or group of beneficiaries. Instead they exist with the purpose of furthering some kind of cause or goal. See Purpose Trust Act, 2004.
Authorised Purpose Trusts are often compared to charitable trusts, which have charitable purposes such as relieving poverty or aiding refugees. Unlike charitable trusts, Authorised Purpose Trusts need not have goodwill as their aim. Authorised Purpose Trust assets or income may be distributed to any number of people for purposes of any number or kind, whether charitable or not. Only one significant restraint on these trusts exists – they may not hold land or an interest in land in The Bahamas, besides an office lease for business purposes.
Authorised applicants appointed in the written trust instrument have various rights as to an Authorised Purpose trust, including standing to make various applications to the court relating to trust administration. These rights are in addition to those held by the trustee. The authorised applicants essentially have the same rights as beneficiaries would of an ordinary trust. For example, they can inspect trust documents and petition the court to recover trust property. Trustees of Authorised Purpose Trusts must be individuals licensed as financial and corporate service providers or a licensed bank or trust company.
Because the objects of such a trust can be purposes, individuals, or companies, or some combination thereof, Authorised Purpose Trusts are extremely flexible tools for which a large amount of leeway is often placed in the trustees' hands. If the trust document allows it, the trustee may determine how to allocate income or assets to each purpose or beneficiary – potentially excluding a purpose or beneficiary from receiving any income altogether. Generally the trustee has discretion as to how to accomplish the trust's purpose and serve its beneficiaries in the best way.
Authorised Purpose Trusts have been used in a variety of ways – to create a jointly charitable and philanthropic trust, to separate a company's legal ownership from control of its operations, to preserve family investments, to hold single uniquely valuable assets, and in financial management and financing contexts.
To find out more about various types of trusts, visit Gonsalves-Sabola Chambers online or call the office at +1 242 326 6400.