Trust and Foundation Glossary

Trust and foundation law has its own vocabulary, and several words mean something narrower than they do in everyday speech. The entries below follow the Trusts Act 2001 and the Foundations Act 2012, and they are listed alphabetically. They give general information only: how a term applies to a given family depends on the facts, and an adviser should confirm it.

A reader looking for the meaning of settlor, trustee and beneficiary will find all three below, together with the roles that sit around them.

A

Articles

Additional rules that a foundation's council may adopt if the charter allows it. Each council member signs them. They supplement the charter and do not replace it.

Asset protection

The use of a legal structure to keep assets away from certain future claims. The protection has limits: it depends on the timing of the transfer, the settlor's intention and the claim concerned. Courts look at the substance of the arrangement, not only its label.

B

Bare trust

A simple arrangement in which the trustee holds assets for a beneficiary who is entitled to them outright, much like a nominee. It carries few of the features associated with family wealth planning.

Beneficial owner

The natural person who ultimately owns or controls a structure, or on whose behalf a transaction is carried out. For a trust, the anti-money-laundering legislation (FIAMLA 2002) treats the settlor, the trustee, any protector, each beneficiary (or class of beneficiaries and objects of a power) and any other individual with ultimate effective control, including through a chain of control, as beneficial owners.

Beneficiary

A person, or a class of persons, for whose benefit the trustee holds the trust property. A beneficiary may have a fixed entitlement or only a hope of receiving something at the trustee's discretion. Their rights depend on the terms of the deed.

Breach of trust

A failure by a trustee to do what the deed or the law requires, or the doing of something forbidden. A beneficiary may ask a court for a remedy, such as restoring the trust property.

C

Charitable trust

A trust whose exclusive purpose is one of those listed in the Trusts Act 2001: relief of poverty, education, religion, protection of the environment, human rights and fundamental freedoms, or another purpose beneficial to the public. It may pursue its aims in Mauritius or elsewhere.

Charter

The founding document of a foundation. It states, among other things, the name, the founder and the founder's notification address in Mauritius, the purposes, the assets first endowed and the beneficiary or how one is to be chosen.

Council

The governing body of a foundation. The Foundations Act 2012 requires at least one member habitually resident in Mauritius, and it bars minors, bankrupts and people convicted of fraud or dishonesty. The foundation council page covers its powers and duties.

D

Discretionary trust

A trust in which the trustee decides who among the beneficiaries receives what, and when, within the limits set by the deed. No beneficiary can demand a particular payment. The discretionary trust page explains how this works in practice.

Distribution

A payment or transfer of trust property to a beneficiary. Under the Income Tax Act, a distribution to a trust beneficiary is deemed to be a dividend for that beneficiary.

E

Enforcer

The person who can act to enforce a purpose trust, which has no beneficiary able to do so. The Trusts Act 2001 does not allow the same person to be both trustee and enforcer of one trust. The enforcer is entitled to the annual accounts, a copy of the deed and the legal advice the trustees receive.

F

Fiducie

The civil-law mechanism, found in French law, under which assets are transferred to a fiduciary to be managed for a stated purpose. It resembles a trust but is not identical to it.

FIAMLA

The Financial Intelligence and Anti-Money Laundering Act 2002. It sets the rules on identifying beneficial owners and extends its transparency obligations to foundations, which it treats as legal persons.

Financial Services Commission (FSC)

The regulator of non-bank financial services in Mauritius. It licenses corporate service providers and qualified trustees and keeps the register of trusts that have a qualified trustee.

Firewall

Provisions meant to shield a trust from challenges based on foreign law. For example, a transfer by a settlor who is not a citizen cannot be set aside under the succession rules of the settlor's domicile or nationality. See firewall protection for the scope and the exceptions.

Fixed trust

A trust in which the deed itself sets each beneficiary's share, leaving the trustee no choice over who receives what.

Forced heirship

Rules, found in civil-law systems, that reserve part of an estate for certain close relatives and limit what a person may leave by will. How a trust interacts with them is covered under forced heirship.

Foreign trust

A trust governed by a law other than that of Mauritius. Under the Trusts Act 2001 it is governed by its terms and its own law, but it cannot be enforced in Mauritius where that would amount to an offence, be contrary to public policy, or bear directly on immovable property situated in Mauritius.

Foundation

A legal entity under the Foundations Act 2012, in force since 1 July 2012, that can pursue charitable or non-charitable objects for a person, a class of persons or a defined purpose. It has legal personality only once registered with the Registrar and issued a certificate of registration.

Foundations Act 2012

The statute that governs foundations in Mauritius. It deals with registration, the charter, the council, the secretary and record keeping.

Founder

The person who endows a foundation and, with the charter, sets its purposes. The founder may be a beneficiary, which is not so for every role in a trust.

FSC-licensed corporate service provider (Management Licence)

A firm authorised by the FSC to provide corporate services, such as acting as secretary of a foundation or as a qualified trustee. It is the usual gateway between a family and the regulatory framework.

G

Governing law

The law that decides the validity and effect of a trust. It is chosen in the deed and can influence everything from the trustee's duties to the rights of heirs.

Guardian

A person appointed to watch over a trust or foundation and its purposes, often alongside the trustee or council. The role is set by the instrument, not by a fixed statutory template.

H

Hague Trusts Convention

An international treaty that sets common rules for recognising trusts across countries. It matters when a trust created in one country holds assets or has beneficiaries in another.

I

Intestacy

The situation in which a person dies without a valid will, so that the default rules of succession decide who inherits.

Irrevocable trust

A trust that the settlor cannot cancel or take back. The Trusts Act 2001 presumes a trust to be irrevocable by the settlor and the settlor's legal representative unless the deed expressly provides for revocation.

L

Letter of wishes

A non-binding note from the settlor that tells the trustee how the settlor would like discretion to be used. It guides the trustee but does not bind it. See letter of wishes.

Life interest

A right to enjoy property, or the income from it, for life, after which the property passes to someone else. A life interest trust gives one person that enjoyment and another the capital.

P

Protector

A person, who may be an adult individual (the settlor included) or a company, named in the deed to advise the trustee. Unless the deed provides otherwise, the protector can remove and appoint trustees, set the governing law, change the place of administration and withhold consent to certain acts, without becoming a trustee. The page on the trust protector sets out the powers in detail.

Purpose trust

A trust created for a purpose and not for named beneficiaries. It is valid if the purpose is specific, reasonable, achievable and lawful, the deed names an enforcer and a successor enforcer, at least one trustee is a qualified trustee, and the deed says what happens to surplus assets when the trust ends.

Q

Qualified trustee

Under the Trusts Act 2001, an FSC-licensed corporate service provider (Management Licence) or another person resident in Mauritius whom the FSC authorises to provide trustee services.

R

Register of trusts

A register that the Financial Services Act 2007 requires the FSC to keep for domestic trusts and for foreign trusts with at least one qualified trustee. Its content includes the deed and its amendments, the identity and addresses of the parties, the governing law and the place of administration. See the trust register for how it is used.

Registrar of Foundations

The authority that registers foundations. In practice this is the Registrar of Companies.

Reserved powers

Powers that the settlor keeps over a trust. Keeping too many can undermine the trust, so the balance matters.

Revocable trust

A trust that the settlor may cancel because the deed expressly allows it. Because the default is the opposite, this feature must be written into the deed.

S

Secretary

The officer that every foundation must have. It must be an FSC-licensed corporate service provider (Management Licence) or another Mauritius resident authorised by the FSC.

Settlor

The person who creates the trust by transferring assets to the trustee. Under the Trusts Act 2001, the settlor may also be trustee, beneficiary, protector or enforcer, but cannot be the sole beneficiary of the trust. The settlor page explains the limits.

Sham trust

An arrangement that looks like a trust but is not one in substance, for instance because the settlor never truly parted with control. A court may set it aside.

Spendthrift trust

A trust that protects a beneficiary's interest, so that it may end, be restricted or be suspended if the beneficiary becomes insolvent or creditors seize their property. The Trusts Act 2001 recognises it in terms of a protective trust. See spendthrift trusts.

T

Testamentary trust

A trust that takes effect on the death of the person who created it, usually through a will.

Trust

A legal relationship in which a trustee holds and manages assets for beneficiaries or for a purpose, under the terms of a deed and the law. The Trusts Act 2001 has been in force since 1 December 2001.

Trust deed

The written instrument that creates the trust and sets its terms: the parties, the trust property, the powers and the rules on distribution. Its content is described in what a trust deed contains.

Trust property

The assets held by the trustee under the trust. They are kept separate from the trustee's own assets.

Trustee

The person or company that holds the trust property and administers it. The trustee must keep up-to-date accounts and records, and an alphabetical register of the names and last known addresses of each beneficiary and settlor. Accounting records are kept for at least 5 years after the operations they cover are completed.

Trusts Act 2001

The main statute on trusts in Mauritius. Its later amendments are consolidated by the FSC.

U

Ultimate effective control

Control over a structure exercised at the end of a chain of ownership or influence. It is the test used to identify beneficial owners, and it can catch a person who holds no formal title.

V

Variation

A change to the terms of an existing trust. Whether and how a trust can be varied depends on the deed, the law and, in some cases, the court.

W

Will

A document stating how a person wishes their estate to pass on death. It operates alongside forced heirship rules, and it is a separate tool from a trust.