An offshore asset protection trust is a legal entity which is comprised of assets distinct from the assets of the individuals behind the trust. The primary parties to this legal entity include the Settlor, the person who transfers assets to the trust, the Trustee, the person who administers the trust according to the specific instructions of the Settlor and the Beneficiaries, the person(s) for whose benefit the trust is created in the first instance.
The main advantage of setting up such structures as family trusts, business trusts, corporations, bank accounts, credit cards, brokerage accounts, etc. offshore is to set them up in a jurisdiction where you are guaranteed absolute confidentiality, absolute privacy and minimal tax. Business affairs conducted from tax havens are not subject to scrutiny from government agencies of your home country or accessible to competitors, ex-spouses, relatives, lawyers or investigators.
A Common Law Trust is a legal agreement/contract. An offshore Trust is one which is constituted beyond the laws of the country where you live. Having been developed over time, the Trust has become a seriously effective means of minimizing taxes and protecting assets. Accumulated wealth may be passed to heirs privately, with minimal cost and without devastating tax consequences.
An individual or Company may have one or more 'trusts' set up for different purposes or to hold varied assets. The 'Trust Document,' Declaration of Trust or Deed is the written instrument which specifies the duties of the Trustee, names the Beneficiaries and lists the property held in the Trust Corpus.
A GRANTOR or SETTLOR: This is the person, company or other entity placing property/assets into the Trust.
A TRUSTEE: The person, company, trust or other entity who 'receives' the property/assets to be managed for the benefit of the beneficiaries.
BENEFICIARIES: The person, persons or other entity named to benefit from the trust property/assets.
The Grantor/Settlor: Laws in high tax countries specify that if the Grantor controls the property (by being both the Grantor and the Trustee ) then he/she must pay the taxes on the earnings of the Trust. Placing the Grantor as Trustee is not recommended. The Trust must be irrevocable to qualify as a true asset protection device.
The Trustee: The Discretionary Trust provides for a party to serve as Trustee, being himself beyond the jurisdiction of the Beneficiaries. This could be an offshore Corporation or a trustee appointed by the registered licensed Trust Company in the country where your Trust is set up. You can give the Trust a name if you wish or just a number.
The Beneficiaries: If the Beneficiaries are known, there could be a decision to claim taxes due at home even though there has been no distribution by the Trust. The privacy and confidentiality laws of the offshore countries take this into account. With the privacy feature in the law, there is no chance that anyone can get information as to who the Beneficiaries are. The Beneficiaries are not named in the Trust Document.
A "Letter of Wishes" filed with the trustee is all that is required to name the beneficiaries and their interest in the Trust assets. A Letter of Wishes may be filed at any time giving details of distribution, adding or deleting of beneficiaries, or specifying who the beneficiaries shall be upon death.
The Trustee may NOT reveal details about the Trust, pay out or distribute trust property to ANYONE if it is not for the BENEFIT of the Beneficiaries. Generally, A Trust Deed is not registered with any tax jurisdiction. A trust is a private arrangement. There are no requirements for accounting or reports to any agency. There is NO ACCESS provided as to the activities of the Trustee except as arranged by the parties.
Tax Saving, Avoidance and Deferral: You do not pay tax until you 'repatriate' the assets whether they be cash or the very house you live in. Any asset can be designated Trust Property. Assets that earn income or gain in value in an offshore jurisdiction are not subject to domestic taxes.
Safety: Having assets offshore provides you a financial reserve should disaster strike at home.
Protection against judgments: It's nice to have reserves that can't be seized, liened or attached with the stroke of a Court's pen or phone call from a tax authority. Though not impossible for them to get at, it's much harder for them to attach your assets when they're held in a Trust, offshore, by a Trustee who isn't beholden to anyone but the wishes and the good of the Beneficiaries.
Privacy: The business of no one but you, the trustee and whomever else you think should know. The Offshore Trustee is required to say nothing to external inquisitors.
Pass on Title to heirs with ease: Wills, living trusts, domestic trusts invariably pay taxes - especially when assets are transferred... AN OFFSHORE TRUST DOES NOT!
Faster accumulation of wealth: Trusts can own companies, have bank accounts, own portfolios, hold trading accounts and not pay taxes.
The Trust is one of the most flexible financial instruments ever to come about.
Although structures such as Trusts have existed since Roman times and have been used by the very wealthy for a long time, most people believe that they are not qualified or are not allowed to employ these methods. Most believe that to use such methods as offshore corporations you must have a great fortune to protect. They believe that it must be outrageously expensive. You are not far wrong. It used to be very expensive and very complex and the countries which have offered their protection as tax havens never saw the potential of making it affordable to people of more average means.
Some Banking institutions today still require a minimum deposit of at least $1,000,000 to open an account while many more now will open accounts with as little as $500 US.
With the ever increasing level of taxation, it is becoming more and more difficult for one to put aside enough money to provide for their retirement. It is becoming more difficult to hold onto the assets one has accumulated and to be able to pass them on to heirs without erosion.
If you have several million dollars to place offshore and many thousands of dollars to pay to in legal fees, going offshore always has been an easy matter. If you have as little as $15,000 or $20,000 to protect, you should be "offshore." It is economically feasible for you to be offshore and you need only do it once in your lifetime. You and your heirs will benefit for generations to come. As little as $15,000 invested at 8% will pay $1200 per year. With annual fees at aprox. $500 your fees and part of your initial cost is paid. As your assets grow, your costs don't. The same $15,000 invested in a high tax country at 40% marginal rate, your net would be just $720. Your net after your annual costs are aprox. $650 just $70 difference. In year two, the compounded net is in your favor and from that point on.
