Trusts have become very important in planning international income, capital gains and estate tax and may be structured to suit the peculiar requirements of a family.
What is an Offshore Trust?
An offshore trust is created as a result of transferring assets to a trustee thus investing in the trustee, legal ownership and by extension, responsibility for management of the assets and distribution to the trust beneficiaries. The law of trust generally permits the beneficiaries to be the same individuals or corporations who transferred the assets to the trust.
The trust is administered in accordance with the with the terms set out in the trust instrument or deed and generally governed by the trust laws in force within the particular jurisdiction in which the trust is set up. The law also permits a diverse range of assets to be held by an offshore trust including but not limited to shares and stocks held in companies (quoted or unquoted), investment portfolios, real and intellectual property.
- Private relationship, for example, in the Isle of Man offshore trust deeds are not publicly registered
- Wealth protection
- Tailored to specific family requirements
- Recognised in all common law jurisdictions
- Increasing recognition in important civil law jurisdictions
- An important tool in international income, capital gains and estate tax planning
- Used by corporations for employee benefit plans, retirement and stock option schemes, insurance plans and special financing arrangements
Who Needs an Offshore Trust?
Still not sure whether you need an offshore trust? Typically, private individuals or corporations looking to achieve the following may need offshore trusts:
- Insulation against uncertainty arising from political, economic or family upheavals
- Inheritance of wealth while ensuring tax-efficient framework
- Transfer of wealth to heirs in consonance with personal wishes as opposed to the laws of the country of domicile
- Consolidation of assets possessed globally in a single location
- Minimisation of estate taxes
What assets can be held by an offshore trust?
- Shares and stocks in both quoted and unquoted companies
- Investment portfolios
- Real and intellectual property
- Bank deposits
- Life assurance policies issued on the life of the Settlor
- Most other types of asset
Local Taxes
Local taxes are typically excluded in instances when the trust is created in a jurisdiction where the law excludes local residents from enjoying benefits from the trust.
