Offshore Asset Protection

Offshore asset protection can be described as the use of various financial and legal strategies that help to hedge against threats that may trigger undesirable situations or cause loss. Offshore asset protection is best understood as the application of these strategies but with the use of asset protection devices sourced outside of one’s domicile.

Offshore asset protection could range from a simple strategy as opening an offshore bank account in which a certain amount of cash is deposited privately, to forming various legal entities that are specifically designed to hold assets.

As technology and legal wisdom increases, entities are modified to adapt to changing financial circumstances and needs. Foundations are one of those offshore asset protection entities that emerged under civil law and have been around for a very long time. Offshore foundations can be regarded as the modern version of the foundation in that along with capital mobility, entities have become equally mobile.

Consequently, assets do not have to be kept domestically, but can be transferred offshore to a foundation in which the equal benefits are obtained and privacy is taken a step further. Like the foundation, offshore trust, captives and protected cell companies can be seen as an entity that has risen to meet the needs of the modern global economy. Protected Cell Companies

Offshore companies are probably the most commonly used asset protection entity around. This is because the concept of the offshore company is not only simple to understand while formation procedures are straightforward, but because the offshore company is multi-purpose and can be used to do business and trade.

One must bear in mind that while offshore asset protection strategies have the same goal: to protect assets; every strategy is distinct and has its specific legal requirements. This leads to differences in offshore asset protection tools which make it necessary for an individual or corporation to be certain about a particular strategy, how it is best used and for which circumstances it is most suitably used.

For example, despite the similarities of offshore trusts and foundations, the trustee is the legal owner of an offshore trust while offshore foundations have no owners. To this end, the offshore foundation is often regarded as a more reliable offshore asset protection tool than the trust. Similarly, offshore trusts are not intended for trade and commerce, therefore, the offshore company may be the more manageable and suitable option if looking for an asset protection tool that shields assets while doing business internationally.

Devising a suitable offshore asset protection plan is an effective way to build a wall around one’s assets. Some offshore asset protection plans are more effective if used along with another plan. Not only does offshore asset protection safeguard, but sees to it that a secure channel through which estate can be managed and administered is developed.
While estate planning and asset protection differ, the two activities complement each other. For example, an offshore protection strategy such as an offshore trust fund can be put in place during the time that a business is operational so that the employees receive a lump sum after a certain number of years of service, while the employees can in turn set up their separate estate planning tools so that in the event of their death a particular person inherits that trust fund.

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