Offshore trusts offer substantial benefits to many investors and other persons having large capital assets. A carefully established offshore trust will transfer a person's investments to a vehicle permits either the deferral or minimization of income taxes on investment income without contravening the tax laws of the individuals country of origin.

There are other major benefits that may be derived from offshore trusts. However, you are reminded that you should always seek professional advice if you plan to move your investments and other assets offshore.

Trusts can be located either in the settlor's country of origin or located offshore. A trust may be made, signed or administered anywhere in the world. The only requirement is that the jurisdiction under which the trust is established recognizes the legal concept of the trust. Consequently, an offshore trust is simply any trust that has been created and is to be administered by trustees located in a jurisdiction other than the settlor's country of origin.

Many offshore jurisdictions recognize trusts, and many offshore countries will also permit you to choose as to which country's laws will govern a trust. Under some circumstances, this can be very important.

Properly selecting a trustee for your trust is crucial, because the trustee will take legal ownership of the trust property. The trustee that you select normally must be restricted to financial institutions that specialize in trust services. There are many reputable and well established trust companies available both onshore and offshore having extensive experience in trust administration.

A lot of offshore trusts are established in order to obtain one or more of the following benefits:

To avoid inheritance tax and/or the problems of probate and inheritance laws in the settlor's country of origin.

To minimize taxes on investment income that is imposed by the settlor's country of origin.

To legally insulate the settlor's assets from litigation, bankruptcy or seizure.

To hold or manage an offshore corporation that is engaged in international business activities, thereby minimizing business or corporate taxes.

To protect wealth should a settlor reside in an unstable country.

To permit a settlor to enjoy privacy of his investments and to whom he is providing benefits.

Any kind of asset may generally be transferred to and held in a trust, including cash, securities, real estate, businesses, gold and art.

Transferring certain assets offshore may be illegal, depending on the category of the assets and the country of origin. You should always seek professional advice in your home country prior to establishing an offshore trust as well as in the country where the trust is to be set up. In addition, remember that the United States has strict reporting requirements on assets transferred into offshore trusts.

A word of caution: Offshore trusts can be very expensive to establish and maintain. Forming an offshore trust is not usually worthwhile unless the trust property is substantial.

If you would like more information regarding asset protection, trusts, family limited partnerships or the subject of this article please call or email our office.