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Background

Samoa is a Safe and Stable State with Strong Judicial System

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Samoa, officially known as the “Independent State of Samoa”, is a country consisting of two main islands (Savai’i and Upolu), and four smaller islands (Manono, Apolima, Fanuatapu and Namua). Until 4 July 1997, it was known as ‘Western Samoa’. Samoa is a unitary parliamentary democracy with eleven administrative divisions, and the sovereign state is a member of the Commonwealth of Nations. This should not be confused with ‘American Samoa’, which is an unincorporated territory of the US located in the South Pacific Ocean, southeast of the independent nation of Samoa.

The Samoa International Finance Authority (SIFA) is a quasi-government corporation overseeing and regulating all international finance centers in Samoa. It is governed by its principal Act, namely the Samoa International Finance Authority Act 2005.

The Samoan judicial system incorporates English common law and local customs. The country was governed by New Zealand until its independence in 1962, which explains why English is their second official language.

General Information

Samoa is a Preferred Jurisdiction for Offshore Business and Wealth Management Needs

The Samoa Trust is governed by the 2014 Trust Law, and has always been an attractive jurisdiction for managing family estate plans. Settlors have the flexibility to reserve powers and maintain control over the trust, and can even form his or her own company, acting as the trustee to exercise more control.

The 2014 Trust Law has also established a special type of trust called the Samoa International Special Trust Arrangement (SISTA), which allows the trustee to hold the shares of a Samoa company while allowing their designated company directors to maintain day to day activities and management, on behalf of the trustee. Under SISTA, the trustee is not liable for any errors, omissions, willful misconduct or fraud performed by the company’s management.

SISTA can also be used with limited partnerships where the trustee holds partnership assets, while permitting the general partner to proceed with day-to-day management.

Non Residents can also create trusts with all foreign held assets and non-resident beneficiaries.

Offshore Trust Benefits

A Samoa Trust can enjoy the following benefits:

A Samoa Trust can enjoy the following benefits:

  • 100% Foreign Control: The settlor, beneficiaries, trustee, protector, and enforcer can all be non residents. All assets can be held overseas.
  • Privacy: Non-commercial trusts do not have to be registered with the government. Commercially active trusts have to be registered, but the names of the settlor and beneficiaries, assets descriptions and locations remain private.
  • Efficiency: Trusts can be set up expeditiously.
  • Taxes: Non-resident settlors and beneficiaries are exempted from paying related taxes. However, U.S. residents and others subject to global taxation must report all sources of income to their government.
  • Asset Protection: Creditors are given two years to file claims. Samoa courts will not recognize foreign court judgments or laws that are in conflict with local laws.
  • Estate Planning: Perpetual trusts provide many generations with estate planning benefits and allows legal tax efficiency.
  • Settlor’s Control: Settlors can retain their powers in a trust and appoint overseers to protect the beneficiaries and utilization of the trust
  • Language: English is an official language of Law in Samoa.

Name of the Samoa Trust

Trusts cannot adopt the same (or similar) name to any other legal entity in Samoa.
The name of the trust must end with the word “Trust”.

Registration

Since the establishment of the 2014 Trust Law, trusts not engaged in active business no longer have to register with the Samoan government. However, trusts which are likely to be engaged in commercial activities must be registered.

Formation

Trusts can be set up quickly and efficiently, and there are no formal templates or ridged format requirements. The legal Trust documents can be composed in any language as long as it can be accurately translated into English.

Asset Protection

Samoan laws only provide creditors a two-year window to file claims after a trust has been created, or when a specific asset has been transferred into the trust. Otherwise, after those two years, creditors’ claims to seize the trust’s assets will be barred even if foreign courts grant a judgment or court order.

Foreign judgments, including claims of foreign succession rights and judgments after a marital divorce are not enforced by Samoan courts.

Samoan courts also do not recognize foreign succession laws.

Probate Avoidance

With a Samoa trust, there may be no need for a testamentary will, or a court probate process after the settlor’s death. This will save the heir’s time and resources in probate proceedings.

Duration

Trusts can be perpetual (forever) or be terminated after a prescribed period.

Settlor

The settlor can be a citizen of any country and can reside anywhere.

Trust Instrument

In preparing the trust instrument, the settlor has wide discretion and freedom in detailing the powers of trustees and the rights of beneficiaries, directing how investments should be managed, and can appoint nominees and custodians.

The settlor can also reserve powers to manage trust assets, investments, and can modify the trust.

Additionally, Section 47 of the 2014 Trust Law provides that the power to give prescribed directions may be reserved in a trust to the settlor or to the protector, or to any person or persons whether exercisable alone, personally, jointly by majority of persons or by reference to a casting vote or to persons in order of priority. If the trust provides for the giving of prescribed directions, the trustee is also protected from any liability to loss in value of the trust property arising directly or indirectly as a result of the giving of prescribed directions.

Trustee

Within the trust instruments, settlors can establish what powers and duties the trustee can have in relation to managing the trust.

Trustees do not have to be Samoan residents, and can be citizens from any country residing anywhere. Trustees can be either natural or legal persons.

The 2014 Trust Law also provide that the number of trustees of a trust must be at least two (2), unless firstly, there was only one (1) trustee appointed originally, or secondly, a trust corporation was appointed, or thirdly, the Public Trustee is acting; or lastly, the trust provides otherwise.

Beneficiaries

Beneficiaries cannot be residents of Samoa. They can be citizens of other countries and reside anywhere else.

Protector and Enforcer

A trust can appoint a ‘protector’ to protect the rights of the beneficiaries. Additionally, an enforcer may also be appointed to ensure that the trustee adheres to the purpose and terms of the trust instrument. Both the protector and enforcer have the power to add or remove beneficiaries and trustees, or to overrule decisions made by the trustees. The trust instruments will define the power and roles of the protector and the enforcer.

Taxes

As long as the settlor and beneficiaries are not Samoan residents, the trust will not have to pay corporate taxes and beneficiaries are not required to pay income, estate or inheritance taxes.

Note: United States taxpayers and everyone who has to pay global income tax must disclose their income to their respective tax authorities.

Public Records

Trusts that are not commercially active do not have to be registered with the government. Trust involved in commercial activities must be registered, but asset descriptions and locations, along with the names of the settlor and beneficiaries can be kept private.

Conclusion

A Samoa Trust can enjoy the following benefits: total foreign control, privacy, maximum tax efficiency, asset protection, estate planning, efficient formation, additional controls for settlors, and use of English as one of the official languages of Samoa.

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