Protecting your assets is very important, and is much safer than having them just scattered about, putting your financial situation at risk. A way to protect your assets is by putting them into a trust, and usually an offshore one. An offshore trust is similar to an onshore trust, aside from the fact that it is held at an offshore financial centre and has the benefit of greater asset protection than onshore trusts. However, both trusts mean basically there is an arrangement between the “Trustee”, which is usually a wealthy family, and their chosen group of people, and they make a “Deed of Trust”. This means that offshore trust would hold title to all the assets, funds and property in accordance with the deed of trust.
An offshore trust is effectively protection to shield assets from scrutiny, tax and civil legislation, and bring peace to people who want to protect their assets so they can help their future descendents.
Many families will create and put their assets into an offshore trust so that they pay less inheritance tax when they die, and using an offshore trust to hold your funds is also safer than onshore. For example, someone in the UK might register their trust somewhere in the Isle of Man, such as Sanctuary Trust, so therefore it is offshore but still very close to home.
There are many ways offshore trusts can protect your assets, such as:
- They are structured to take every liability into account and protect you, your estate and any heirs from income, capital gains and estate and inheritance tax
- When you die, your assets will be kept private to protect you and that of your descendents
- Any properties held within an offshore trust are protected from the complicated process after death
- Your exact wishes regarding assets or money willed to vulnerable people you care for after your death must be exactly according to your wishes to ensure that these assets are used appropriately.
Offshore trust provide flexibility, control and authority for the trustee over their assets, and they provide absolute confidentially and protection from liability. Offshore trusts make sure no one gets into your trust and helps you distance yourself from your assets. You would no longer have legal ownership but you are still in a position of control.
They are also a good alternative to wills because the terms are private, and not everyone wants the financial status public. Furthermore, trusts are often used for estate planning to make sure the assets go to the people they are meant to go to. Most offshore trusts specifically exclude forced heirship rules, and the rules can be re-set up. For example, if your partner re-marries, you can then give your children the money that would have automatically gone to her. Lastly, trusts have their own special tax laws, and they are often used as holding companies for legal tax avoidance. Most offshore trusts will not charge any inheritance tax, or capital gains tax on income sourced outside the country.
Offshore trusts are a great way to put some distance between you and your fund whilst knowing they are safe and your financial status is protected, private and not at risk.