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A properly configured and managed business structure can provide substantial tax benefits, protect assets, improve business efficiency, reduce costs and maintain confidentiality.
An improperly configured business structure is a recipe for disaster for the owner and his business.
If you hold assets in your own name – or even in a corporation – you could be doing yourself a huge disservice. In the increasingly bankrupt western world, the affluent have a target on their back – a target that could cost you everything you have. Not to mention government wealth confiscation is on the rise.
Setting up a foreign trust is a sound asset protection strategy to add a layer of protection between your assets and anyone trying to seize your wealth. By using an offshore trust rather than a domestic trust, you can enjoy additional protections not available in your home country.
An offshore trust is related to a traditional onshore asset protection trust in that the end goal is to protect your assets. They are also similar in relation to the parties involved: a Settlor, a Trustee, and the Beneficiaries.
The difference is that with an offshore trust, also called a foreign trust, the trustee is a financial institution that is not in the same country as the settlor – a foreign country, a foreign trust. A number of these foreign countries are offshore, hence the use of the term ‘offshore trust.’
Having an offshore trust just may be your best option when it comes to protecting your assets. You can work with an asset protection trust institution that is in a jurisdiction with advantageous laws around wealth, protection of wealth, and which has lower taxes.
An offshore trust is created when assets are transferred to a trustee. The trustee becomes the legal owner and is responsible for managing the assets and distributing them to the beneficiaries of the offshore trust (which could include the person or corporation which transferred the assets to the trustees) in accordance with the terms of the trust deed.
The terms on which the Trustees administer the trust assets are detailed in a trust deed and trust legislation to govern trusts has been enacted in many common law jurisdictions.
As an independent third party, we work closely with accountants, lawyers, financial advisors, tax consultants and other financial service providers to alleviate complications arising over corporate governance or local regulator restrictions.
An offshore trust is very much like a traditional onshore trust, except that it has the benefit of being held at an offshore financial centre. Just like a normal trust, offshore asset protection is a great method of protecting assets. It is an arrangement entered into by a person (or group) known as the “Trustee,” and a distinct person or group of people known as the “Settlor,” by which provisions are made in a binding, legal form known as the “Deed of Trust”. Overseas trusts are formed in order to hold the title to assets, funds and / or to property and to manage these assets in accordance with the deed of trust. These then provide offshore trust benefits and distributions to a person or group of persons known as the “Beneficiaries” of the trust funds. An offshore trust has the additional benefit of far greater offshore asset protection than the onshore variety.
The trustee and / or the offshore trust company entrusted with the management of the trust are bound by a fiduciary duty to uphold the agreement, and they agree to the requirements set out by the deed of trust. Attempts at describing trusts will often liken them to a corporation or foundation, they are unlike either; they are a trusting arrangement, which is supported by a written agreement that is binding in order to provide for the beneficiaries.
Offshore trusts may be created for a variety of reasons and many of our clients are now using them to ensure financial security in retirement and to provide funding for school fees and university fees, for instance.
Once you decide to setup an offshore trust to protect your assets, the type of trust must be selected, the duration of the trust, and important decisions on defining details must be made. This includes deciding whether or not the trust is revocable, whether or not the trust will be discretionary, and to specify the rights, duties, obligations, and expectations of the trustee.
With regard to revocable or irrevocable offshore trusts, they can either be revoked at any time with the provisions for this made clear by the Settlor, or they can have a pre-determined duration with no allowances for revocability, concluding only when the terms of its creation as specified in the deed of trust are fulfilled.
By contrast, a discretionary offshore asset protection trust can fall under either category and is defined as a trust with a lot of in-built flexibility with regards to how the trustee handles distributions to beneficiaries and even provides the trustee with rights to appoint or add beneficiaries. This relinquishes a lot of authority over the offshore trust to a trustee, however, and highlights the importance of the careful selection of a competent, well-reputed trustee or offshore trust holding company with good references, a worthy reputation, and the experience necessary to successfully and faithfully fulfill and honor the terms of the trust.
Quite simply, offshore trusts provide complete and absolute confidentiality. Assets and title to property, for example, are put into the trust for the trustee to manage. This gives absolute protection from liability. This is how offshore asset protection can be cast in stone. Whilst the legal title passes to the trustee, the intent of the trust is to provide for the beneficiaries. These beneficiaries, hold very strong rights with respect to the interests in the trust and most jurisdictions recognise that the intent is to provide the defined benefits for the these beneficiaries and, in court cases, rule favorably in their direction when questions as to the management of the trust arise.
Because these offshore trusts are almost always found in offshore tax havens or in low-regulation offshore jurisdictions with reputations for offshore asset protection and superb confidentiality, the offshore trust also benefits from these features. Assets managed by overseas trusts are, in the main, free from tax which is applicable in a settlor’s home country or jurisdiction, such as the UK. If the trust is formed to provide for the benefit of the children or heirs of the settlor, for instance, the offshore trust may provide a vehicle to protect against intense inheritance scrutiny and taxation. Moreover, offshore trusts offer unparalleled confidentiality when formed in low regulation offshore financial centres plus increased protection from the threats of civil litigation and liability, and even from divorce or business dissolutions. It is extremely difficult, except in situations of accusations of a severe criminal offence, for an outside entity to pierce the confidentiality shield surrounding an offshore trust in most offshore jurisdictions.
Offshore trusts are often formed in offshore financial centres or tax havens which have minimal regulation and low taxes and which have a proven reputation for successful management and execution of offshore asset protection trusts and offshore trust funds.
TBA specialises particularly in the Cook Islands trusts. However, it is not absolutely necessary for this offshore location to be Cook Islands. Other alternative offshore locations, known for their degree of confidentiality and anonymity, such as Nevis and Cook Islands, are also options to be considered.
On the other hand, there are many successful offshore trust formation jurisdictions and countries which are not tax havens and yet have superb confidentiality and substantial asset protection shields. One common denominator is that these jurisdictions base their trust regulations and statutes on English law. Another European jurisdictions such as Cyprus, Isle of Man and Malta, can offer successful trust administration and have adapted their statutes in order to conform to the proper trust administration models based upon English legislation.
Forming an offshore trust ensures substantial protection for assets from scrutiny, tax and civil legislation. It should be apparent that while the cost of forming and maintaining an offshore trust may be considered substantial, the establishment of such an asset protection entity will provide for peace of mind for those looking to protect their substantial assets or provide for their heirs / offspring in the longer term.
We can set up trusts, foundations and managed companies as tax effective planning solutions for estate duties, inheritance tax, capital gains tax deferral and income tax.
In order to provide you the highest degree of anonymity and confidentiality, independently on where to decide and set up your Trust, please request one of our Team Experts to Contact You as soon as possible.
Asset protection is immediate with a Belize Trust. That is, Belize is the only Trust jurisdiction that does not have a minimum “vesting” period before the trust begins to protect assets.
The Cook Islands is recognised as the world leader in formation of asset protection trusts, safeguarding the assets of high net worth clients.
Main advantages of a Cypriot Trust:
Stable and benign tax regime.
Governed exclusively by Cyprus law.
Protects against the application of foreign laws.
The Isle of Man offers wealthy families a politically stable, well-regulated and practical base in which to establish wealth and business succession planning structures.
Nevis has highly protective legislation for international LLCs and trusts. These entities also provide for great flexibility in international tax planning.
Trusts in Seychelles are governed by the Seychelles International Trusts Act of 1994. Amendments to the original act were made in 2011 by the International Trusts (Amendment) Act of 2011, which served to increase the desirability of Seychelles as an international trust jurisdiction by introducing greater flexibility into Seychelles International Trusts.