ASSET PROTECTION TRUSTS (APTs)
It is arguable that all trusts are asset protection arrangements to some extent or other. However, Gibraltar has a specific statutory classification which falls within the provisions of its bankruptcy law.
Gibraltar amended the Bankruptcy Act in 1990 to enable Asset Protection Trusts (APT) to be set up as part of an overall estate planning exercise. An APT has to be registered in Gibraltar in order to be afforded the protection of the legislation, although registration is simple and confidential. Once registered, the ability of a certain type of creditor to litigate against the trustee may be constrained.
The amendment to the Act sets out the criteria which must be met in order for such a trust to be validly created. These are:
- The assets transferred to the trustee must not be held by nominees, but must be held on trust.
- The settlor must be an individual.
- The settlor may not be insolvent at the date of the creation of the trust nor become insolvent in consequence of its creation.
- The trust is registered in accordance with the regulations.