The Voidable Dispositions Ordinance
In the absence of a term to the contrary Turks and Caicos Islands law provides that the law of any other jurisdiction with which the trust or any disposition made thereunder may otherwise be connected is to be excluded. The courts of the Turks and Caicos Islands consider they have jurisdiction over a trust in any one of the following circumstances: where the trustees reside on the Islands, where the trust property is situate on the Islands, where the trusts are administered from the Islands, and where the trust was set up under Turks and Caicos Islands law.
A "disposition" is the transfer of assets into a trust by a settlor. Creditors who have a claim against a settlor may wish to set aside the "disposition" and use the proceeds realised to satisfy their claim.
The provisions of the Voidable Dispositions Ordinance 1998 sharply circumscribe the circumstances in which a "disposition" can be set aside by a creditor, and so make the Turks and Caicos Islands that much more attractive a jurisdiction into which to settle a trust.
Generally speaking the Ordinance only applies to "dispositions" made after the Ordinance became law. "Dispositions" can be set aside by the Supreme Court on the application of a creditor in any of the following sets of circumstances:
if within 2 years of the "disposition" the settlor is deemed to have a contractual debt towards the creditor. If an application to the Supreme Court is not to be time barred it must be commenced by the creditor within 6 years of the "disposition" or within 6 years of the day the contractual debt arose, whichever is the later;
if at the time of the "disposition" the settlor had a contingent liability towards the creditor. Where the liability was contingent an application to set aside a "disposition" must be commenced within 6 years of the "disposition" if it is not to be time barred;
if within 2 years of the "disposition" the creditor
had the right to bring a legal action against the settlor
for an outstanding debt . If the application by the creditor
to the Supreme Court to set aside the disposition is not to
be time barred it must be commenced either within 6 years
of the disposition or within 6 years of the legal action accruing,
whichever is the later.
In any application to set aside a "disposition" the burden of proof lies on the creditor to prove that the settlor wilfully intended to defeat the obligation owing to the creditor by making the "disposition".
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