What Is a Trust?

Trust meaning in Mauritius: the short version

A trust is a legal relationship, not a company and not a contract in the usual sense. One person, the settlor, transfers assets to another, the trustee. The trustee holds those assets and manages them for the benefit of named people, the beneficiaries, or for a stated purpose. The rules come from the Trusts Act 2001, which came into force on 1 December 2001.

Mauritius is unusual because its private law is largely civil-law in style, inherited from the French Code Civil, while its trust legislation borrows from the common-law tradition. A reader from France, Switzerland, Spain or Latin America will therefore meet an institution that has no exact twin at home. This page explains what it is, what it is not, and where the limits lie. For the wider legal picture, see Mauritius trust law.

The idea in plain words

Think of three questions: who gives, who holds, who benefits?

• The settlor gives assets and sets the terms.
• The trustee holds the assets and must follow those terms and the law.
• The beneficiaries are those for whom the assets are held.

The key point for a civil-law reader is the split between control and enjoyment. The trustee holds and administers the assets, yet the trustee does not hold them for personal gain. The beneficiaries enjoy the benefit, yet they do not manage the assets. A civil-law owner combines both; a trust deliberately separates them.

A trust is not a legal person

A company or a foundation has its own legal personality. A trust does not. It cannot sign contracts or own assets in its own name. The trustee does so, acting as trustee, and the trust assets are kept apart from the trustee's personal estate. That separation is the whole point: the assets are not the trustee's own wealth, and they are not the settlor's once validly transferred.

Readers weighing the two vehicles can compare them in trust vs foundation.

How it differs from civil-law ideas

Civil-law systems usually know ownership as a single, whole right. A trust splits what a lawyer would call the management of a patrimony from the benefit of it. Mauritian law also has its own civil-law mechanisms, such as the fiducie, and these are not the same thing; the differences are covered in fiducie and trust compared.

The table is a simplification. Real cases depend on the deed and on the facts, which is why a personal analysis by a qualified adviser matters.

Who can be who

The Trusts Act 2001 allows more flexibility than many newcomers expect, but it also sets limits.

The settlor

Under section 8 of the Act, the settlor may also act as trustee, beneficiary, protector or enforcer. The settlor cannot, however, be the sole beneficiary of the trust they created. A transfer by a settlor who is not a Mauritian citizen cannot be set aside under the succession rules of the settlor's domicile or nationality. The role and its boundaries are developed in the settlor.

The trustee

A trust may have no more than four trustees, and at least one must be a qualified trustee at all times. A qualified trustee is a FSC-licensed corporate service provider (Management Licence), or another Mauritius-resident person authorised by the Financial Services Commission (FSC) to provide trustee services. The trust does not become invalid merely because a trustee or a qualified trustee is missing. The trustee's responsibilities are set out in duties of a trustee.

The beneficiaries

Beneficiaries hold rights against the trustee: to see that the terms are respected, and to remedies if they are not. Their position is explored in trust beneficiaries.

The protector

Under section 24, a trust may provide for a protector, an adult person (including the settlor) or a legal entity, whose task is to advise the trustee. Unless the deed says otherwise, the protector can remove and appoint trustees, change the governing law, move the place of administration and withhold consent to certain acts. The protector does not become a trustee by doing so. See the trust protector.

What a trust can and cannot do

Irrevocable by default

Section 11 presumes that a trust cannot be revoked by the settlor or the settlor's legal representative, unless the deed expressly provides for revocation. For a civil-law reader, this contrasts with a gift that can be revisited, or with a will that can be rewritten until death. A transfer to a trust is generally meant to be a real transfer.

Duration

A trust other than a purpose trust has a maximum duration of 99 years from creation, unless it ends earlier. A purpose trust, charitable or not, may last indefinitely. Accumulation of income is possible for the whole maximum duration, but it cannot exceed 25 years where the trust holds Mauritian immovable property. The subject is covered in how long a Mauritius trust can last.

Family and protective uses

The Act recognises protective or spendthrift trusts. A beneficiary's interest can be made subject to termination, restriction on transfer or suspension if the beneficiary becomes insolvent or their property is seized. This is one reason families consider trusts when planning for heirs, although the outcome always depends on the deed and the circumstances.

Purpose trusts

A purpose trust, charitable or not, is valid without beneficiaries if its purpose is specific, reasonable, achievable and lawful. The deed must name an enforcer and a successor enforcer, at least one trustee must be a qualified trustee, and the deed must say what happens to surplus assets at the end. The same person cannot be both trustee and enforcer of one trust. Transfers of Mauritian immovable property to a non-charitable purpose trust are void. This page is about family trusts, so this is only a brief mention.

Types of trust at a glance

Families usually meet the same handful of forms: the discretionary trust, the fixed-interest trust, the testamentary trust and the protective trust. The differences are explained in types of trust available in Mauritius.

Privacy, records and transparency

A trust is not secret. It is confidential, but also recorded.

• Confidentiality. Under section 33, the trustee keeps information about the trust confidential. A court orders disclosure only on the request of an investigating authority, and only where the information is required in good faith for an investigation or proceedings concerning financial crime.
• Trustee records. Section 38(3) obliges the trustee to keep up-to-date accounts and documents, 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 concerned are completed.
• FSC register. Under section 26A of the Financial Services Act 2007, the FSC keeps a register of domestic trusts and of foreign trusts that have at least one qualified trustee. It holds, among other things, the trust deed and its amendments, and the identity and addresses of the beneficiaries, trustees, settlors, protectors and enforcers. The register is not public. More detail is in the register of trusts.
• Beneficial ownership. Under anti-money-laundering law, the beneficial owners of a trust include the settlor, the trustee, any protector, each beneficiary (or the class of beneficiaries) and any other individual who ultimately exercises effective control.

When a trustee opens a business relationship with a bank or similar reporting person, the trustee must declare that they act as trustee.

Tax: a short word

Tax depends on the facts and should be reviewed by an adviser. In outline, the Income Tax Act 1995 taxes a trust on its taxable income at the Part IV rate of the First Schedule, which is 15 %. The former exemption for non-resident trusts was repealed with effect from 1 July 2021. A distribution to a beneficiary is treated as a dividend in the beneficiary's hands. For the full picture, see how trusts are taxed in Mauritius.

Foreign trusts

A foreign trust is governed by its own terms and its own law. It cannot, however, be enforced in Mauritius to the extent that it would amount to an offence, would be contrary to public policy, or would apply directly to immovable property in Mauritius.

Is a trust right for you?

This is an orientation, not advice. The practical steps of setting one up are not covered here. If you would like to be put in touch with an FSC-licensed corporate service provider (Management Licence), use the form on the contact page.