Placing assets such as cash, property, or trading companies into an offshore trust allows you to amass assets and avoid hefty taxes, and pass those assets to your heirs without incurring hefty inheritance taxes. Offshore trusts also provide protection from civil asset seizure, bankruptcy, creditor liens, divorce, or legal claims. You can name one or many trustees to administer the terms of the trust. You can also name one or many beneficiaries to receive benefits of the trust, and funds can be disbursed regularly or in a one-time payout.
Assets that can be placed into a trust, called Trust Properties, may include anything which can be legally transferred from one ownership interest to another, such as:
• Cash or securities
• Land or property
• Cars, boats, antiques
• Retirement funds
• Companies
• Copyrights
The person placing funds into the trust is known as the Settlor. Depending upon the jurisdiction where the trust is established, this person may be named in the Trust Deed. There are locations which allow you to give assets to a trust anonymously, ensuring total privacy.
There are several types of a href= http://www.lom.com/offshore-bank-account-vs-offshore-brokerage-account >offshore trusts which may be established:
1. Beneficial Trusts
These types of trusts specifically name the beneficiary and the property or amount of money to be received or inherited. Beneficial Trusts are valuable for asset protection, but do not provide much protection in terms of privacy or from inheritance tax liabilities. All beneficiaries can be taxed on the entire sum of the trust, whether they receive any assets or not, simply because they are viewed as potential owners of the trust when specifically named.
2. Discretionary Trust
The actual beneficiaries of the trust are at the sole discretion of the trustees, providing a certain amount of tax shelter for potential beneficiaries since there is no specific designated time or amount of disbursement. Taxes are paid only upon receipt of the proceeds of the trust. Avoiding such taxes can be done by disbursing payments into an offshore bank account or offshore company linked to the trust.
3. Offshore Asset Protection Trust
This type of trust is used either by individuals or corporations, to hold assets in such a form as to be untouchable by legal proceedings or creditors.
Structuring and Administering a Trust
There are seven fundamental parts of a trust. In order to ensure the trust is written correctly and legally binding, it should only be written by someone with specific understanding and experience in trust matters.
1. Settlor
The person who formulates and places assets into the trust. This can be an individual or a corporation.
2. Deed of Trust
This is the actual document that outlines the specific details of the trust. Actions of the trustees are controlled by both the wishes of the settler and the laws of the jurisdiction in which the trust is established.
3. Trust Property
The assets placed into the trust by the Settlor.
4. Trustees
The person, people, or corporation given complete control over how the assets or income of the trust are to be allocated, depending upon the wishes of the Settlor as outlined in the Deed of Trust.
5. Beneficiaries
The person or persons to receive assets or funds from the trust as designated by the Settlor. They can either be described in writing within the Deed of Trust or privately be made known to the Trustees.
6. Protector
A third party named to oversee a trust to ensure it is being administered according to the wishes of the Settlor.
7. Letter of Wishes
A private letter between the Settlor and Trustees describing the Settlor’s wishes exactly given differing circumstances. This document is not legally binding but rather serves as a guide for the Trustees. This document may be changed at any time.
In most offshore trusts, Trustees must be licensed by the government of that jurisdiction to carry out the responsibilities. Such people are normally well-established and highly reputable persons such as lawyers or accountants.
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