Why protect your assets?
In an increasingly complex and litigious economic and legal environment, wealth protection has become a major concern for entrepreneurs, investors, professionals and families around the world. The threats to wealth are numerous, often unpredictable, and can materialise quickly without adequate preparation having been put in place.
Business risks
Business bankruptcy, professional liability, commercial disputes, joint and several liability, personal guarantees on loans, business partner default.
Personal risks
Divorce and division of marital assets, contested inheritance, civil legal proceedings, precautionary seizures, tortious liability.
Political risks
Political instability, nationalisation, asset confiscation, freezing of bank accounts, arbitrary regulatory changes, international sanctions.
Economic risks
Financial crises, currency devaluation, hyperinflation, exchange controls, restrictions on capital movements, banking system failure.
Key point: Setting up an asset protection strategy does not mean concealing assets or evading legitimate obligations. It is a preventive and proactive approach, entirely legal, aimed at structuring your wealth so as to protect it against unforeseen events while ensuring its orderly transmission to future generations.
The Mauritian legal framework: the Trusts Act 2001
The Trusts Act 2001 of Mauritius provides one of the most robust legal frameworks in the world for asset protection through trusts. Mauritian legislation recognises and protects the separation between the trust estate and the personal estate of the parties involved, while incorporating advanced protection mechanisms rarely found in other jurisdictions.
Firewall provisions (Section 24A)
One of the most distinctive features of Mauritian trust law is the existence of firewall provisions, introduced by section 24A of the Trusts Act 2001. These provisions constitute an essential legal shield for asset protection.
Principles of the firewall provisions: The firewall provisions of the Trusts Act 2001 provide that Mauritian law is the law applicable to the trust, regardless of the personal law of the settlor or the beneficiaries. Foreign courts cannot recharacterise the rights of beneficiaries nor challenge the validity of the trust on the basis of their own domestic law (forced heirship, community of property, etc.).
| Firewall provision | Description | Impact on protection |
|---|---|---|
| Applicable law | The trust is governed exclusively by Mauritian law | Immunity against unfavourable foreign laws |
| Non-recognition of foreign judgments | Foreign judgments contrary to the trust are not recognised in Mauritius | Protection against seizures ordered abroad |
| Forced heirship | Foreign forced heirship rules do not apply to the trust | Total freedom of disposal of assets |
| Community of property | Foreign matrimonial property regimes do not apply to the trust assets | Protection in the event of divorce |
| Challenge period | 2-year limit for challenging a transfer of assets | Legal certainty after the period expires |
Protection against fraudulent transfers (Section 25)
The Trusts Act 2001 provides safeguards against abuse. Section 25 defines the conditions under which a transfer of assets into a trust can be challenged (fraudulent disposition). A transfer may be characterised as fraudulent if:
- The settlor was insolvent at the time of the transfer or became so as a result of it
- The transfer was made with the aim of putting assets beyond the reach of existing creditors or creditors whose claims were foreseeable
- The settlor did not receive adequate consideration for the transfer
- The transfer was made within the 2 years preceding a challenge action
Note: The burden of proof lies with the creditor challenging the transfer. They must demonstrate that the settlor intended to defraud their creditors at the time of the transfer. Transfers made in good faith, when the settlor is clearly solvent, are extremely difficult to challenge.
Other protections under the Trusts Act 2001
| Protection mechanism | Section of the Trusts Act | Description |
|---|---|---|
| Separation of estates | Section 22 | The trust assets are legally distinct from the trustee's personal estate |
| Spendthrift clause | Section 26 | Beneficiaries cannot assign or encumber their rights in the trust |
| Trustee protection | Section 27 | The trustee is not required to satisfy the settlor's personal creditors |
| Confidentiality | Section 28 | Details of the trust are not accessible to the public |
| Duration | Section 14 | The trust can have an indefinite duration (purpose trusts) |
| Immunity of distributions | Section 24 | Distributions made in good faith by the trustee are protected |
Asset protection strategies
The discretionary trust: optimal protection
The discretionary trust is the most effective asset protection tool for a fundamental reason: beneficiaries hold no vested rights over the trust assets. They have only a mere expectancy of receiving distributions if the trustee decides to make them, in the exercise of its discretionary power.
This characteristic creates a particularly robust protection barrier: a beneficiary's creditor cannot seize a right that does not legally exist. Since the beneficiary has no enforceable right over the trust assets, there is nothing for creditors to identify, quantify or seize.
Discretionary trust vs fixed trust: impact on protection
| Protection criterion | Discretionary trust | Fixed trust |
|---|---|---|
| Beneficiaries' rights | No vested rights — mere expectancy | Defined and quantifiable rights |
| Seizability by creditors | Impossible (no right to seize) | Potentially seizable |
| Protection in case of divorce | Very high | Moderate |
| Protection in case of bankruptcy | Very high | Moderate |
| Spendthrift clause | Applicable and very effective | Applicable but lesser protection |
| Trustee flexibility | Full discretion | Limited by fixed terms |
Multi-level structuring
For enhanced protection, a multi-level wealth structuring combining several legal vehicles can be put in place. This approach creates successive layers of protection and allows for compartmentalised risk management.
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Level 1: Discretionary trust
Top-tier structure established in Mauritius under the Trusts Act 2001. The discretionary trust holds the entirety of the interests in the underlying vehicles. The firewall provisions protect the entire structure.
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Level 2: Mauritian GBC (holding)
A Global Business Company held by the trust serves as an investment holding. It benefits from the network of 45 double taxation treaties in force (MRA, 2026) and centralises the management of interests in the operating entities.
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Level 3: Operating companies
Operating companies (trading, real estate investment, IP) are held by the GBC. Each activity is isolated in a separate entity, limiting the contagion of risks between the various branches of the wealth.
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Level 4: Geographic diversification
The underlying assets are spread across different jurisdictions (real estate, bank accounts, portfolios), reducing exposure to a single political, economic or regulatory environment.
The role of the protector in asset protection
The appointment of a protector strengthens the governance of the trust and provides an essential indirect control mechanism for asset protection. The protector acts as an intermediary between the settlor and the trustee, allowing a form of supervision to be maintained without compromising the separation of estates.
Veto over distributions
The protector can approve or veto distributions proposed by the trustee, preventing inopportune distributions or those likely to expose the assets to risk.
Removal of the trustee
The protector can remove a defaulting trustee and appoint a new trustee, ensuring continuity of protection even in the event of conflict with the incumbent trustee.
Amendment of beneficiaries
The protector can add or exclude beneficiaries from the class of beneficiaries, adapting to changes in family circumstances (divorce, death, birth).
Control over investments
The protector can approve major investment decisions, ensuring that the investment strategy is consistent with the wealth preservation objectives.
Protection against specific risks
Protection against business creditors
Entrepreneurs, business owners and professionals are particularly exposed to business risks. Bankruptcy, a dispute with a client or supplier, a professional liability claim, a call on a guarantee can threaten the entire personal estate. The Mauritian trust makes it possible to shelter essential assets before these risks materialise.
Protection is all the more effective when the trust has been established during a period of solvency, with no temporal link to an existing or foreseeable dispute. The 2-year period under section 24A confers enhanced legal certainty: once this period has passed, a creditor can no longer challenge the transfer of assets.
Protection in the event of divorce
Divorce is one of the most significant wealth-related risks. A properly established discretionary trust offers effective protection through several mechanisms:
- The trust assets do not form part of the settlor's personal estate and are excluded from the marital division
- The firewall provisions prevent foreign courts from recharacterising the trust assets under the matrimonial property rules applicable to the divorce
- The discretionary trust confers no seizable vested right on the settlor as a potential beneficiary
- The spendthrift clause prevents the beneficiary-spouse from assigning or mortgaging their potential rights
Recommendation: To maximise protection in the event of divorce, the trust should be established well before marriage or at a time when no divorce proceedings are conceivable. A marriage contract referring to the trust reinforces the protection. Ideally, a discretionary trust, a spendthrift clause and a suitable prenuptial agreement should be combined.
Protection against political instability
For people residing in countries with an unstable political environment, or considering relocation to Mauritius, the Mauritian trust offers a solution for jurisdictional diversification. The assets are held in a jurisdiction that is:
- Politically stable (a parliamentary democracy since independence in 1968)
- Regulated (the FSC supervises the financial sector)
- Internationally recognised (member of the FATF, OECD, Commonwealth)
- With an independent judicial system based on English law and the Napoleonic Code
Intergenerational protection
The trust makes it possible to protect family wealth over several generations by preventing the dissipation of assets by imprudent or spendthrift beneficiaries. The following mechanisms ensure responsible management:
- Spendthrift clauses: prevent beneficiaries from assigning, mortgaging or encumbering their rights
- Trustee's discretionary power: distributions are tailored to each beneficiary's actual needs
- Distribution conditions: distributions tied to the achievement of milestones (graduation, age, professional experience)
- Dynasty trust: preservation of capital over the long term, with only income being distributed
Types of protectable assets
The Mauritian trust can accommodate a wide variety of assets, offering comprehensive protection for your wealth:
| Asset category | Examples | Specific considerations |
|---|---|---|
| Real estate | Residences, commercial buildings, land, timeshares | Transferred via a holding company (GBC/SPV) to facilitate transactions |
| Company interests | Listed shares, shareholdings, GBC, holdings | The trust holds the securities — no change in operational governance |
| Investment portfolios | Shares, bonds, ETFs, investment funds, hedge funds | Management entrusted to a portfolio manager appointed by the trustee |
| Cash | Bank accounts, term deposits, multi-currency | Bank and geographic diversification recommended |
| Intellectual property | Patents, trademarks, copyrights, licences, software | Held via a GBC specialised in IP — access to tax treaties |
| Life insurance | Life insurance policies, key-man insurance, unit-linked policies | The trust is designated as beneficiary or owner of the policy |
| Digital assets | Cryptocurrencies, NFTs, tokens, blockchain assets | Mauritius has a regulatory framework for Virtual Assets (Virtual Asset Act) |
| Valuable movable property | Art collections, jewellery, collector cars, wine | Secure storage and suitable insurance to be arranged |
Limits of asset protection through a trust
Asset protection through a trust is not absolute. It is essential to understand its limits in order to structure a realistic strategy that complies with legal obligations.
Fraudulent Dispositions
Section 25 of the Trusts Act 2001 provides that transfers of assets made with the intention of defrauding creditors can be set aside. The creditor must prove:
| Condition | Description | Burden of proof |
|---|---|---|
| Insolvency | The settlor was insolvent at the time of the transfer or became so as a result | Falls on the creditor |
| Fraudulent intent | The transfer aimed to put assets beyond the reach of existing or foreseeable creditors | Falls on the creditor |
| Lack of consideration | The settlor did not receive adequate consideration | Falls on the creditor |
| Time limit | The action must be brought within 2 years of the transfer | Mandatory time bar (limitation) |
Unavoidable legal obligations
Asset protection through a trust does not allow one to escape certain legal obligations:
- Tax obligations: payment of taxes due in all relevant jurisdictions
- Maintenance obligations: alimony and support obligations
- Criminal sanctions: fines, confiscations ordered as part of criminal proceedings
- Money laundering: assets of illicit origin are never protected
International recognition
The effectiveness of the protection depends in part on the recognition of the trust in the jurisdictions where the assets are located. The trust is widely recognised in common law jurisdictions (United Kingdom, Singapore, Hong Kong, Australia). In civil law countries (France, Belgium), recognition can be more complex, although the Mauritian firewall provisions considerably limit this risk. For wealth located in civil law countries, a Mauritian foundation can be a useful alternative or complement.
Best practices for effective protection
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Plan ahead
Set up your asset protection trust well before any threats materialise. A trust established during a period of solvency, with no ongoing or foreseeable dispute, is virtually unassailable after the 2-year period.
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Choose the discretionary trust
The discretionary trust offers the best protection thanks to the absence of vested rights for beneficiaries. Systematically supplement it with a spendthrift clause (section 26 of the Trusts Act 2001).
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Select a professional trustee
A professional and independent trustee, licensed by the FSC of Mauritius, strengthens the credibility of the structure and reduces the risk of it being recharacterised as a sham trust.
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Carry out a complete and irrevocable transfer
The settlor must not retain direct control over the assets. Use the protector mechanism to maintain indirect supervision without compromising the separation of estates.
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Document your solvency
Keep evidence of your solvency at the time of the transfer: financial statements, bank statements, absence of ongoing disputes. These documents are essential in the event of a challenge.
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Diversify geographically
Spread assets across different jurisdictions and banking institutions to minimise exposure to a single country, a single legal system or a single financial institution.
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Structure in multiple levels
Combine a discretionary trust, a GBC holding and operating companies to create successive layers of protection and compartmentalise risks between the different branches of the wealth.
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Review the structure regularly
Laws, family situations and economic environments evolve. An annual review with your advisors makes it possible to adjust the structure to new realities.
Case studies: practical applications
Case 1: International entrepreneur
A French entrepreneur operating in West Africa sets up a discretionary trust in Mauritius to protect his personal assets (European real estate, investment portfolio) against risks linked to his business activities in a geopolitically unstable area. The GBC held by the trust serves as a holding for his African interests. The firewall provisions protect the assets against attempted seizure by local courts.
Case 2: Multi-jurisdictional family
A family with members residing in France, the United Kingdom and Dubai sets up a dynasty trust in Mauritius. The trust holds a GBC that manages an international real estate portfolio (London, Paris, Dubai). The spendthrift clause protects the beneficiaries against their own creditors. The protector oversees distributions according to the needs of each family member.
Case 3: Professional
A South African doctor sets up a discretionary trust in Mauritius to protect his personal assets against professional liability risks. The assets are transferred well before any claim. After the 2-year period, the family wealth is permanently sheltered from civil proceedings related to the practice of the profession.
Our support
Our team of experts supports you in setting up your asset protection strategy in Mauritius:
- Wealth analysis: a full audit of your situation, identification of specific risks and assessment of vulnerabilities
- Structure design: multi-level architecture tailored to your needs (discretionary trust, GBC holding, operating companies)
- Legal drafting: trust deed, spendthrift clause, letter of wishes, appointment of the protector
- Trustee selection: identification of and coordination with an FSC-licensed professional trustee
- Asset transfer: assistance with the transfer of assets and documentation of solvency
- Regulatory compliance: KYC/AML, FATCA, CRS and reporting obligations
- Ongoing follow-up: annual review and adjustment of the structure to legal and family developments
Disclaimer: The information presented on this page is provided for indicative purposes only and does not constitute legal or tax advice. Asset protection through a trust involves complex legal considerations that vary according to your personal situation, your country of residence and the nature of your assets. A trust must never be set up with the aim of defrauding existing creditors or evading legal obligations. We strongly recommend that you consult a qualified legal adviser before making any decision. The laws and regulations mentioned, including the Trusts Act 2001 and its amendments, are subject to change.