Offshore Asset Protection Trusts

Offshore asset protection trusts are among the numerous types of offshore entities that can be established to protect assets and reduce tax burden. Offshore asset protection trusts are not used to do ‘business’ per se, and are more aimed at estate planning and management through the transfer of wealth.

Offshore trust formation is increasingly becoming simpler as individuals better understand the need to protect their assets, especially the importance of putting something in place to ensure that one’s children and or pension fund are safeguarded and provided for. Offshore trust formation is further promoted by the fact that offshore trusts enjoy more privacy than domestic trusts and are therefore more effective for protecting assets.

Offshore companies as well as onshore businesses can settle an offshore trust with the goal of hedging against the risk of litigation, holding shares, real estate or cash. Offshore companies can opt to put the ownership of the company to the offshore trust as an offshore protection trust strategy in order to obtain a greater degree of protection with regard to the company’s shares.

Offshore asset planning is not just for businesses and wealthy families, but for anyone that has an asset that he or she wishes to pass on and ensure that this happens correctly. Offshore asset planning can be done using an offshore trust inter vivos so that the benefits of the trust can be obtained during one’s life time, while a testamentary offshore asset protection trust becomes effective upon the passing of the settlor.

Offshore trust formation services are widely available and the corresponding with a trustee for offshore trust formation is easy with internet access. Trust formation is a service that is highly regulated and legal advice can be obtained so that an offshore trust can be created in a way that best suits the interests and needs of an individual, family or corporation.

Offshore trust formation occurs in offshore trust havens which are countries or jurisdictions where laws for offshore trust formation exist. Offshore companies are formed in offshore havens and are therefore easily facilitated when obtaining offshore trust services.

It is never too late or too early to undertake an offshore asset plan. This plan can be done using only an offshore trust or combining the use of an offshore trust with an offshore company, where the offshore trust owns the shares of the offshore company.

Offshore trusts are legally binding agreements between settlors/grantors and trustees who are expected to remain loyal to the wishes of the grantor. Most offshore trust haven laws for offshore trusts are clear on the duties and powers of offshore trustees, and these laws are flexible enough to allow a grantor to create an offshore trust for offshore asset planning on specific terms.

These terms are presented in an offshore asset protection trust document in which the settlor/grantor gives instructions on how the assets of an offshore trust should be managed or invested. This trust document is often referred to as a trust deed or a letter of wishes. In essence, an offshore trust for offshore asset planning can substitute a Will and in many ways can yield far greater benefits.

Offshore trust havens allows grantors to appoint protectors, who are not to be regarded as the same as the trustee, but are given the right to question decisions taken by the trustee and to monitor the management of the offshore trust.

Protectors generally report to the grantor and are expected to use their discretion when carrying out their functions. Protectors of offshore asset protection trusts are sometimes given powers that usurp those of the trustee to ensure that certain decisions are overturned in the event that it is concluded that a decision is not in the best interest of the beneficiary of the offshore trust. Most offshore tax havens allows the grantors/settlors themselves to be protectors.

Offshore trust formation allows offshore trusts to be created for charitable, non chartable and spendthrift purposes. Spendthrift offshore trusts in particular aim to protect the beneficiary or beneficiaries of an offshore trust from their improvidence.

scroll back to top