Now You Can Have an Offshore Trust and Retain Control of Your Assets

There are a number of ways to set up an offshore trust and still retain significant control over your assets

Even despite the fact that governments such as the British parliament have worked hard to reduce the taxation advantages of an offshore trust for those who reside onshore or in a high taxation nation such as Britain, there are still significant advantages to using an offshore trust over and above simply saving tax.

However, the one underlying factor of a trust that makes them an unattractive solution for so many people is that by placing your assets in such a structure you effectively revoke control of your assets.  Well, what if I were to tell you that now you can have an offshore trust and retain control of your assets?

It’s true!  There are four important methods that you can choose from and use when setting up a trust structure, whether that is as a structure to protect your assets, your estate, your heirs or your beneficiaries for example.  Each of these four methods will allow you, the settlor, to retain significant amounts of control over your assets and how they are managed within the offshore trust structure.

However - even before we get into examining and discussing these methods please note that another misconception that abounds is that once established a trust can never be revoked – i.e., once you place your assets within a trust structure that’s it for life.

This is simply not true either – there are such structures known as revocable trusts which can be dissolved if required.  Whether such a structure is suitable for you and your requirements is of course another matter and one that you need to discuss with a professional trust company who can advise you whether a revocable trust will affect your income tax, inheritance tax, asset protection or stamp duty situation for example.

Now, going back to the four methods available that will allow you to have an offshore trust whilst retaining control of your assets, they are: -

1) Writing a Memorandum of Wishes

A Memorandum of Wishes is an official document written by the settlor to the trustees explaining how, had the assets remained in his direct possession, he would have managed his assets.  It is a document that basically suggests to the trustees how they might like to manage your assets for you!  This document is not enforceable though – this means that in practice any reputable firm of trustees will follow it to the letter until such time as it is no longer in the interests of the trust’s assets or beneficiaries to do so. 

2) Appointing a Protector

A protector is someone who can have certain control over the trustees.  The level of control has to be carefully assigned so that the protector is not considered another trustee as this can complicate matters.  Usually a settlor will appoint a trusted advisor or friend in such a role and the most common level of control they can have is rejecting proposals made by trustees in the event that these proposals are not deemed to be in the best interest of the assets or the beneficiaries of the trust.

3) Incorporating an Offshore Company Together with a Trust

It is sometimes deemed advantageous to place assets within a company structure and place the shares of the company within an offshore trust structure.  The settlor can become an active director of the company and still have day to day hands on management of his assets whilst the shares of the company are protected for the beneficiaries within the offshore trust structure.  This sort of scheme gives a lot more flexibility but it can create a negative taxation situation so its merits and possibilities need to be examined in depth with a trust company.

4) Appointing Joint Trustees

The final method that can be adopted to ensure a settlor retains some control over assets placed within an offshore trust is through the appointment of joint trustees.  Each set of trustees would have to agree to anything relating to the management of the trust and a settlor could take on the role of the second trustee or be the controlling director of a company appointed in such a role. 

Each of the above options exists, is legitimate, is available to a settlor and is worth discussing with any company you consider appointing as your advisors when establishing a trust.  It is imperative to mention the fact that each alternative has advantages and disadvantages and some may not be applicable to you depending on what you want to use a trust for. 

If you wish to discuss the concept of establishing a trust to meet your personal requirements or you wish to speak to a company who can set up and manage a trust for you, please complete our offshore advice service form and we will put you in direct contact with a reputable company to assist you.