Wealthy parents looking to build a trust fund for their children could possibly do so in the Marianas in the near possible future.
In response to the call by the administration and House Speaker Blas Jonathan Attao (R-Saipan) for members to come up with revenue-generating bills, Rep. Ivan Blanco (R-Saipan) is working on a bill that could make the CNMI a trust fund hub.
“I’m pleased that I have worked with several people in the community who have expertise in trust laws,” Blanco said. “I am working on a bill where we can establish the CNMI as a hub for trust estates.”
Blanco, who chairs the House Ways & Means Committee, said that his bill is using the South Dakota model, adding that while it is a big state, it is like the CNMI. The state’s trust law attracts the extremely rich for benefits that include asset protection and privacy, among others.
“We can provide the CNMI as an opportunity for them to park their trust here in the CNMI, and from there, we can impose a very minimal tax and that would be our selling point, that there will not be an exorbitant, high tax to tax their trust fund,” he added.
“Say, you are well-endowed, you’re successful, you have a child and you want to provide for your child but you don’t want your trust funds to be eaten away by high taxes in other states so you look around…” he said. “… you shop around and you say, ‘The CNMI has lower taxes, whereby when my child uses the funds, it’s not taxed too high,’ your child gets more of the benefits from it. From the CNMI standpoint, we get to tax.”
Blanco said that he hopes that his bill will be considered by other House members, who are also working on revenue-generating bills on their own.
Aside from “taxing” the trust funds, Blanco also said that the bill could generate more revenues, including employment, for the CNMI in terms of businesses that would be put up to facilitate the trust estates.
“When they build a business here, they have to pay the business license tax, then they have to hire a trustee. This trustee needs staff to ensure that funds are well-protected, the benefits are paid on time. So that’s employment. And when they do issue those payments to the beneficiaries, we can tax a little bit of that.”
Blanco is hopeful that his bill would enable the CNMI to attract well-off individuals in the U.S. mainland.
“…If we can sell that this can be a hub with lower taxes, I hope that we can attract some other well-off individuals in the mainland, or perhaps we can open it up to the world,” he said.