- We are from Switzerland but working and living in Saudi Arabia. Are we eligible to join the Plan?
- Does my child have to go to college or university in Canada or the United States to receive benefits?
- If the Trust is in Canadian or US dollars, why is it in Bermuda and not Canada or the United States?
- I don't know anything about financial regulation in Bermuda. Is there someplace I can go to get more information?
- Why is the Plan offered in Canadian and US $ Dollars only?
- I understand how the Plan grows tax-free, but when my child receives an education payment because they have qualified, won’t they be taxed?
- How do I apply for the Plan?
- What options do I have to pay for the units I purchase?
- How many units should I purchase?
- What does the Trustee do and are they paid fees?
- Can I transfer my Plan to another child if my child decides not to go to college or university?
- What happens to the Plan in the case of my death and I do not have a will?
We are from Switzerland but working and living in Saudi Arabia. Are we eligible to join the Plan?
Yes. Any family from anywhere in the world can enrol in the program (except the USA) and can continue to participate even if they move to another country.
As part of the application process subscribers acknowledges that the Trust is resident in Bermuda and that the contract that outlines their rights within the Trust is subject to the laws of Bermuda.
Does my child have to go to college or university in Canada or the US to receive benefits?
No. As long as the school is recognized as a post-secondary education institution by the governing body in the country that it operates in and the program your child is taking is a qualifying program, your child can go to any school anywhere in the world.
If the Trust is in Canadian or US dollars, why is it in Bermuda and not Canada or the US?
A trust of this kind would be subject to taxation in Canada if it was resident in Canada and similarly for the US. Therefore we needed to find a jurisdiction that provided a tax-free environment for the trust and a banking regime that was sophisticated enough to allow us to invest funds easily into Canadian and US Government debt securities.
We looked at places like Cayman Islands and Isle of Man and decided that Bermuda had the best combination of secure trust law, asset protection, protection of client privacy and banking sophistication.
I don’t know anything about financial registration in Bermuda. Is there someplace I can go to get more information?
Yes. Please visit the Bermuda Monetary Authority website at www.bma.bm
Why is the Plan offered in Canadian and US $ Dollars only?
The three primary reasons for these currency choices are currency strength, investment return and management expertise.
Canadian government debt securities have, on average, generated the highest yields vs. other major government debt securities for the last 30 years. Canada is also one of the safest and least volatile of G-7 nations with a stable currency and responsible fiscal management.
The Canadian government also allows non-residents to purchase government debt securities without being subject to withholding tax on income from those securities.
The US currency continues to be the most accepted currency world wide, and US $ debt securities issued by the US Government have over the last twenty years generated one of the best combinations of currency strength and investment return.
Equally important, management of the Plan administrator , O’Shaughnessy Education Foundation has had almost 20 years experience in the Canadian and US or government debt securities market and offering of international education plans denominated in either US or Canadian dollars.
The Plan will provide the facility to exchange funds into another major currency if requested by the subscriber for payment of principal or education payments, however, during the life of the Plan all reporting to subscribers will be in either US or Canadian dollars.
I understand how the Plan grows tax-free, but when my child receives an education payment because they have qualified, won't they be taxed?
As an international trust, resident in the Bermuda, the STI Plan is not required to deduct tax or report the income to any jurisdiction for tax purposes. Therefore the student receives 100% of their allocated education payment.
In most cases the student has a choice regarding the jurisdiction they wish to receive the funds and whether to disclose the education payment as income.
In the few circumstances where the student determines that they must declare the income for tax purposes, the tax laws allow this income to be offset by tuition fees and other education expenses.
In most cases this will eliminate any tax liability for the student.
How do I apply for the Plan?
You need to submit four items to qualify for acceptance in the STI Plan:
- A completed and signed application form to the Trustee
- A copy of a legal birth document confirming the birth date of your child
- A confirmation of the wire transfer of funds to HSBC issued by your bank.
- A copy of your passport (including primary and joint subscribers).
The application form can be sent to you electronically, by facsimile or by regular mail. We will also send to you wire transfer instructions to assist you when providing direction to your bank with respect to the wire transfer.
You may return the signed application, birth document copy, wire transfer confirmation you receive from the bank, and copy of your passport in electronic form or by facsimile as long as the original application is received by the Trustee within 60 days of the application being accepted.
You will receive an e-mail confirmation that funds have been received (wire transfers usually take two to four days to arrive) and a formal welcome package about two weeks after that which will provide details of the terms of your plan, the detailed plan agreement and a wall certificate, suitable for framing so your child is always aware that their future education is secure.
What options do I have to pay for the units I purchase?
There are three options – by lump sum, annually for five years or annually until your child turns 18. The amount you pay for each method is different, and designed so that each method will earn approximately the same amount of interest over the life of the Plan.
For example, one unit for a one year old child would cost:
- $945 as a lump sum payment
- $222 per year for five years; or
- $120 per year for 17 years
Please see the Offering Memorandum for a list of deposit amounts for all ages.
How many units should I purchase?
The number of units really depends on the amount you feel comfortable with, the amount you think your child should have for college or university and the percentage of your child’s education you would like to save for.
The Plan will automatically accept Plans with deposits up to $50,000. For amounts above this there is an interview and documentation check to ensure Bermuda money laundering regulations are followed.
What does the Trustee do and are they paid fees?
The Trustee role is to protect the subscriber rights under the trust agreement and make sure the administrator carries out its duties in a professional and timely manner.
The Trustee oversees the Plan bank account and has responsibility for ensuring that deposit records have been collected by the administrator and disbursements have been determined and disbursed according to the subscriber contract.
The terms of the arrangement between the Trustee and the administrator provide that neither party can transfer funds out of the account without the acknowledgement of the other.
For this responsibility the Trustee receives a small fee annually from the Plan as outlined in the Offering Memorandum.
Can I transfer my Plan to another child if my child decides not to go to college or university?
Yes. If your child is under 18, you can transfer the Plan to any other child, as long as that child is under 18 as well.
Once the child reaches 18 and their Plan matures the transfer rules require the new child to be the same age or younger and related to the original child.
What happens to the Plan in the case of my death and I do not have a will?
In most jurisdictions, if you have no will the executor of your estate will be appointed by the government and will follow the laws of your country of residence in determining how the estate is managed.
If you have not completed your deposits required under the Plan, the executor of your estate will be required to make these deposits when due to ensure your child is eligible for the benefits under the Plan.
However, if there are insufficient funds in the estate to make these payments the executor has the power to withdraw from the Plan.
Therefore it is important to ensure you make a will and establish a provision that requires the estate to continue to make deposits when due.
If you have completed deposits and do not have a will, consider amending your Plan to allow the deposits to be returned to your child when they qualify for education payments.
This protects you from a government appointed executor using the deposits in the Plan for other purposes when they should be applied towards your child’s education.
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