Advantages of Offshore Trust

Asset Protection - The main advantage of the offshore Trust is the separation of the legal ownership and beneficial ownership. For legal purposes the trustees of the offshore trust are recognised as the legal owners of the assets and the beneficiaries are protected by a body of legal rules, which require trustees to adhere to strict duties as to how to manage the trust. That is why offshore trust is such an irreplaceable tool for asset protection. Assets transferred to offshore trust are no longer part of the property owned by the settler and cannot be claimed by creditors, litigators, etc. The assets could be protected if the settler is experiencing financial difficulties due to bankruptcy, divorce or professional negligence claim. In case that the settler was found insolvent a portion of his assets may be safely settled in the trust structure offshore.

Asset protection should be taking as a preventative measure. You should consider setting up an offshore trust before you have a lawsuit filled against you. It works like insurance. It is too late to buy insurance when your house is on fire. Under certain circumstances the claimant can be successful in getting money out of the offshore trust if it can be proved that the settler moved the assets into trusts knowing about the pending litigation. It is for this reason in the offshore legislation the concept of "asset protection trust "introduced. It safeguards the transfers into offshore trust against future attacks of creditors if there are no claims pending at the time of setting up an offshore trust.

TAX PLANNING. Offshore trust can be exceptional tax planning tool and if correctly structured it will produce substantial savings in income tax, capital gains tax, inheritance tax, stamp duty.

As the beneficiary of the offshore trust is not a legal owner of it, the income, capital gains are taxed in accordance with the rules of the residence of the legal owners - the trustees.

INHERETANCE PLANNING. A lot of people these days do not want their assets to pass to the heirs prescribed by law. If you require more complicated arrangements, like providing a source of income to somebody for life or putting money aside for children's education, offshore trust is an ideal tax planning tool for these purposes.

Trusts help to avoid forced heir ship, but you must choose carefully the jurisdiction where you want to establish the offshore trust.

On death the estate of the person goes through the probate procedure, which is lengthy, expensive and is open to public eyes. Establishing an offshore trust could avoid all these problems.

CONFIDENTIALITY. On asset transfer during probate procedure, the tax authorities need to see the list of all assets owned in order to assess it for estate duty. The details of the assets therefore are open to public. It is not wise to disclose the offshore structure which was set up during the lifetime on death as it would have negative tax consequences. Offshore trust is an alternative legal method to a Will of transferring the assets and it does not have to be included in the Will, hence disclosed to the tax authorities.

You can also derive benefits from setting up an offshore trust if you want to protect the welfare of infant children, the aged, disabled people; or just want to preserve the family wealth with a possible payment to members of the family as they needed;to gain planning flexibility. This list is not inclusive and for illustration purposes only