Offshore Asset Protection and Trust

Offshore asset protection trusts are one of the best tools for protecting assets. Trust and asset protection go hand in hand as trust laws are designed to protect from creditors and civil suits and other circumstances where trust assets may come under attack. Today, there are many countries offering trust formation services as the number of offshore havens have increased. Tax planning has become very important as the rate of taxes in many countries have become absurd. Offshore asset protection trusts can be used effectively in tax planning strategies.

One of the keys to setting up a sound offshore trust with excellent asset protection is choosing a right offshore jurisdiction for registering the trust. Offshore jurisdictions with modern legislation which is strictly enforced are recommended. Establishing a Nevis offshore asset protection trust for example means a trust which is backed by legislation which defers creditors and others going after trust assets. In order to bring a case against a Nevis Trust the accuser must pay a deposit of 25,000 before a law suit can be brought against the offshore trust. The offshore jurisdiction of Cook Islands has a limit on the number of years (1-2) a claimant has to take action against a trust and the accuser must have enough proof for a claim to be considered.

Most offshore jurisdictions do not recognise the rulings of foreign courts and this makes the tax havens perfect for establishing offshore trusts. Keeping assets out of the grasp of creditors, insatiable family members and spouses are factors to consider since it is becoming easier to file law suits aimed at acquiring assets.

Asset protection trusts makes it possible for a settlor of a trust to provide assets for offshore trust formation and still be a beneficiary of the offshore trusts whilst offshore trust law does not recognise this individual as owner of the assets. All assets registered with the trust belongs to that trust, there are no restrictions as to the type of assets an offshore trust can own. The trust asses will be managed by the appointed trustee who will simply be following the clauses of the Trust Deed. The Trust Deed is a document which lays down the foundation for management of trust assets, distribution of assets and any other trust detail deemed important.

Offshore asset protection trusts are exempted from local taxation in the zero tax havens. Offshore trusts are prohibited from owning assets in the tax haven where trust registration took place. Offshore trusts pay no taxes on worldwide incomes and assets; exemptions are granted from the following taxes: transfer and stamp duties, inheritance tax, capital gains tax, income tax and other forms of taxes. A registration fee and an annual fee is the only financial obligation an offshore trust has towards the jurisdiction where registration took place.

An offshore asset protection trust can be used alone or together with other offshore entities in offshore asset protection strategies. Whilst offshore trusts, according to legislation cannot be used for commercial activities, the trust can own companies and other entities which can be sued for carrying out business. Offshore trust can set up offshore bank accounts.

Offshore asset protection trusts can be registered in Nevis, Anguilla, Belize, Cook Islands, Panama, Bahamas, Gibraltar, Jersey and Cayman Islands.