If you’re considering establishing an offshore trust you need to be aware that this is a very serious undertaking and one that requires specialist assistance and advice.
By placing property into trust you’re giving up your legal ownership of the assets in question and you’re placing them out of your own reach.
Advice should be sought from trust professionals on whether the establishment of a trust is actually right in your personal circumstances.
Assuming the decision is that an offshore trust structure will benefit you, caution should then be taken when finding the right company to set up and manage the trust.
By accepting from the outset that there are dangers and traps to be avoided with offshore trusts you will enter the entire process with your eyes open and hopefully avoid creating a situation that you cannot get out of later.
Here is one simple example of how the establishment of an offshore trust structure can go wrong to highlight how important it is to act cautiously and to employ the very best advisers: -
If a married man places significant personal assets into trust to reduce his net worth on paper for taxation purposes but then later divorces his wife and his wife can prove that the man has placed assets into trust, she will be able to claim half the assets in her divorce settlement.
In this case the husband is actually no longer the legal owner of the assets as they are in trust, depending on the type of trust he has established he may have no way of releasing any of the assets or any capital accrued from the assets to meet his wife’s settlement.
Yet the man has to find the capital to meet his wife’s divorce settlement and if he has placed a significant amount of his assets into trust how can he legally come up with the money required by law to settle his divorce?
Nightmare scenario, but a perfectly possible scenario!
I have used this simple example to highlight the fact that there are dangers to consider when it comes to establishing a trust and that the long term nature of a trust’s establishment is something that must be bourn in mind.
That said, there are of course circumstances when the establishment of a trust is absolutely the right decision and if you would like to discuss whether a trust structure could benefit you, your business, family or potential heirs please contact us to be put in touch with trust professionals who can assess your situation and advise and assist you accordingly.
