When is an offshore trust the right decision?

A look at reasons why an offshore trust might be the right decision for you, and a consideration of what exactly can be held in an offshore trust.

Do you think the establishment of a trust is key to your asset protection needs, inheritance tax planning or general tax effective financial planning?

If you think the establishment of a trust is key to your asset protection needs, inheritance tax planning or general tax effective financial planning for example, it is not necessarily essential to establish a trust offshore. 

The establishment of an onshore trust may be applicable depending on your circumstances and professional advice should be sought to establish your requirements and the best solution to meet them. 

That said, the advantages of ‘offshore’ in trust terms are generally threefold: -

1) Tax - If the trustees, settlor and beneficiaries of the trust are resident elsewhere to the jurisdiction in which the trust is held then often the trust will be subject to little or no taxation.

The obvious advantage of this is that the value of the trust fund will accumulate at a greater rate.  Furthermore, by establishing a trust in an offshore jurisdiction, the assets within may very well be protected from any future taxation changes in the settlor’s country of residence and/or domicile.

2) Politics - The protection of a settlor’s estate from governmental interference may be another reason for the establishment of a trust. 

An example of governmental interference would include the imposition of exchange controls.  It is extremely unlikely that most offshore centres would ever introduce such controls.

3) Confidentiality - An offshore trust in a jurisdiction such as Jersey is a private and confidential arrangement between the settlor and the trustees.  Confidentiality can be assured because a trustee does not have to disclose the names of either the settlor or any beneficiaries of the trust they manage to any legal authority and neither does the trust need to be registered.  Furthermore, no documents relating to the trust have to be registered either or made available for inspection by anyone whatsoever. 

Therefore, the confidentiality applied to a trust, its settlor and beneficiaries is often a key factor when establishing a trust offshore. 

Finally, a large number of offshore jurisdictions have managed to avoid double taxation and exchange of information agreements as well - unless of course a court order has been obtained, or a serious crime is suspected to have been committed. 

If you would like to learn more about avoiding inheritance taxation the following may be of interest to you: -

How to Avoid Inheritance Tax

Carl Bayley

This book provides basic and advanced Inheritance Tax planning strategies With examples and planning tips.

Click here to order a copy directly from Amazon!

This will open a new browser window - if you have a pop up blocker you will need to hold down the control key and then click the link!

Or, the following article may prove of interest: -

Offshore Asset Protection - Avoiding Inheritance Tax

When examining which types of asset can be held legally within an offshore trust, it is true to say that most type of asset can be held in this way.

Some of the more common asset types that can be held in an offshore trust are: -

- Stocks and shares
- Investment portfolios
- Physical property e.g., land
- Intellectual property e.g., copyrights
- Bank account deposits and cash
- Investment funds
- Life assurance policies which have been issued on the life of the settlor

If you would like to find out how to establish an offshore trust, or you’d like to speak to an adviser to determine whether such action is necessary for your asset protection needs, let us know.

Whatever your information requirements Shelter Offshore aim to supply free information custom prepared based on your information requirements - and we can put you in touch with specialist offshore advisers when required.

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