Fixed Trust in Mauritius

Definition and fundamental principles

The fixed trust, also referred to as a fixed interest trust, is a legal arrangement in which each beneficiary's rights are defined precisely and determined in the trust deed. Governed by the Trusts Act 2001 in Mauritius, this type of trust is characterised by the predictability and certainty it offers.

In a fixed trust, the trustee has no discretionary power over the distribution of assets or income. Their role is limited to administering the trust's assets and making distributions in accordance with the terms defined in the trust deed. Beneficiaries hold vested and enforceable rights, which is the fundamental difference with the discretionary trust.

How the fixed trust works

Defining beneficiaries' rights

The fixed trust deed precisely determines the rights of each beneficiary. These rights can take different forms:

• Proportional shares: each beneficiary receives a defined percentage of income or capital (for example, 25% for each of the settlor's four children)
• Fixed amounts: precise sums are allocated to each beneficiary according to a determined schedule (monthly, annual or conditional payments)
• Sequential rights (successive interests): beneficiaries receive distributions in an order of priority (the spouse receives income for life, then the capital is distributed to the children)
• Conditional rights: distributions are subject to conditions (reaching a certain age, completing studies, getting married)
• Reversionary rights: the rights of a deceased beneficiary pass to a predefined category of substitute beneficiaries

Role of the trustee in a fixed trust

The trustee's role is more tightly framed than in a discretionary trust:

• Administer the assets with diligence and prudence
• Make distributions in strict accordance with the terms of the trust deed
• Respect the vested rights of beneficiaries without altering them
• Keep accurate accounts and provide regular reports to beneficiaries
• Comply with the regulatory obligations of the FSC and AML/FATCA/CRS standards

The trustee nonetheless retains an important responsibility with regard to investment management. They must ensure that assets are invested prudently and productively, in accordance with the guidelines of the trust deed and the prudent investor rule of the Trusts Act 2001.

Substantial rights of beneficiaries

Beneficiaries of a fixed trust hold significant rights, recognised and protected by the Trusts Act 2001:

• Right to information: beneficiaries can require the trustee to provide information on the management of the trust, the state of the assets and the accounts
• Right to distributions: they can judicially demand the distributions to which they are entitled under the trust deed
• Right of recourse: in the event of a breach by the trustee of their duties, beneficiaries can pursue legal remedies and claim damages
• Right of assignment: depending on the terms of the deed, beneficiaries may assign or transfer their rights to third parties (subject to any anti-assignment clause)

Advantages of the fixed trust

Favourable taxation

Like any Mauritian trust, the fixed trust benefits from Mauritius's competitive tax regime. A non-resident fixed trust is exempt from tax on its foreign-source income (0%), while a resident trust is subject to the standard rate of 15% with access to 45 double taxation treaties (MRA, 2026). Mauritius levies no inheritance tax or gift tax.

Limitations and considerations

Structural rigidity

The counterpart to predictability is a degree of rigidity. The fixed trust does not allow distributions to be adapted to the changing circumstances of beneficiaries. If a beneficiary faces financial difficulties or if their needs evolve, the trustee cannot adjust distributions to account for this — unless the trust deed expressly provides for adjustment mechanisms.

Limited asset protection

The vested rights of beneficiaries in a fixed trust can be vulnerable to creditors' actions. A beneficiary's creditor may potentially seize that beneficiary's rights in the trust (for example, the right to receive 25% of distributions), which limits the effectiveness of the fixed trust as an asset protection tool compared with the discretionary trust.

Complexity of amendment

Amending the terms of a fixed trust is more complex than for a discretionary trust. Any amendment affecting vested rights usually requires the consent of the beneficiaries concerned. The Saunders v Vautier rule allows beneficiaries who are of age and capacity, acting unanimously, to terminate the trust or amend its terms — but that unanimity is often difficult to obtain.

Preferred use cases

Detailed comparison: fixed trust vs discretionary trust

Setting up a fixed trust in Mauritius

1. Precise definition of rights

   Exact identification of the rights to be granted to each beneficiary: percentages, amounts, conditions, sequencing, reversion clauses.

2. Drafting the trust deed

   Preparation of a detailed deed by specialised lawyers, unambiguously defining each beneficiary's fixed rights and the trustee's obligations.

3. Selecting the trustee

   Choice of a professional trustee licensed by the FSC, with experience administering fixed interest trusts and managing investments.

4. Compliance and registration

   Full KYC/AML process for all stakeholders, registration of the trust with the competent authorities.

5. Transfer of assets and administration

   Formalisation of the transfer of assets, implementation of the investment policy and commencement of distributions in accordance with the defined terms.