Trusts

Offshore Trusts

Benefits

The foremost advantage to an offshore trust is the protection gained by rendering assets immune to judgments or creditors. The jurisdictions for offshore locations frequently feature strident laws protecting privacy and are beyond the reach of the laws of foreign countries; any legal challenges would be required to originate in the trustees’ specific country and would prove very costly. Offshore trusts are located in overseas jurisdictions that either established their legal systems on the basis of English common law, or, assimilated it with the dedicated aim of creating a reliable environment for offshore trusts.

It is vital to select a trustee with great care, as they will be taking on substantial responsibilities, and given that offshore trusts are highly intricate and demand the scrutiny of experts in law. The monitoring and regulation of offshore trustees are very tight. Among the strongest offshore jurisdictions for trusts are Belize, Nevis and the Cook Islands. Belize and Costa Corporate Services Limited have been selected by LaingRose due to their history of successfully and diligently providing trust management that is both viable and secure, while allowing beneficiaries to operate effectively. Notwithstanding, we do allow our clients to make their own choices of trustees and jurisdictions. Examples of further jurisdictions offering historically stable offshore trusts are as follows: Canada, The Channel Islands, Britain, Australia, Hong Kong, China, The Isle of Man, Mauritius, Luxembourg, Switzerland, The Seychelles, Finland and Singapore‚ and this list is by no means exhaustive

Offshore trusts may accept the transfer of assets in the form of cash, stocks and shares, property, businesses, gold, art and so forth. Such assets will be assigned to the names of offshore trustees as soon as they are transferred to the trust. You retain the authority to change trustees as the ultimate protector for the trust. Nevertheless, it is generally left to the discretion of trustees to make favourable decisions on behalf of beneficiaries. In order to ensure the proper set-up of trusts and thereby the protection of your assets, we recommend taking expert advice. Remuneration for trustees will naturally be a reflection of the extent of your requirements.

Memorandum of Wishes

This functions to communicate requests to trustees on an ongoing basis, and also to maintain the trust structure. The trustees will in practice implement virtually all legal requests that fall within the structure of the trust. These could be for cash advances to buy real estate as investment, or simply income for yourself or your family to enjoy.

Advantages offered by Offshore Trusts

  • Assets protected very strongly against judgments and creditors (e.g. divorce or bankruptcy)
  • Taxation at very low or zero levels in jurisdictions located offshore
  • The positive effects generated for domestic taxation matters bring markedly improved wealth management results
  • The trust falls outside of the estate according to (IHT) inheritance tax stipulations
  • As the trust falls outside the estate there are no post death delays in probate
  • Contributions are deductible as business expenses
  • Investment income, deposit-based income and rental income are all free of corporation or income tax
  • Capital gains tax will not apply to the sale of personal assets
  • Corporation tax will not apply to the sale of corporate assets
  • The seven year gifting rules for IHT will not be applied as these come into effect as soon as transfer occurs.
  • Wealth protection for your current situation and future generations.

The Key to how Offshore Trusts Work

The legal environment around your wealth changes as soon as your wealth is transferred offshore, meaning that different rules take effect on your wealth. Therefore, the way wealth grows will also change, as will the ways in which transfers to beneficiaries are executed. Further, the trust provides greater control and increased access to your wealth, and eventually the same level of control and rights of access to trust funds will pass to your beneficiaries. There is no need for physical assets such as cash, land, or even investments to be transferred physically offshore; it is merely the rights to ownership that are transferred offshore.

Legal and safe processes and strategies that have stood the test of time are used for the transfer of assets from the tax environment in the UK to offshore trusts, and are known as statutory reliefs. We work with experts who have been implementing strategies for offshore remuneration trusts (RTs) since 1989. Historically, trusts have in fact been supported in their decision-making by the courts, and, in the case of MacDonald (Inspector of Taxes) v Dextra Accessories Ltd and Others (2003), a ruling by the High Court of Justice stated that Remuneration Trusts could not be classed as tax avoidance. Precedent was therefore set.

Offshore Trusts can hold the following wealth:

  • Corporate and Personal Assets
  • Cash
  • Yachts, planes, cars, and other private property
  • Property developments, and investment or commercial properties
  • Company shares, share portfolios and other investments

Specific legislation applies to different kinds of trusts, necessitating in turn a variety of routes for the transfer of different kinds of wealth. Our team of legal experts will be happy to explain all of these to you.

© LaingRose Ltd. 2017