Most Assets Can Be Held By An Offshore Trust

For individuals, an offshore trust can be a way of transferring their wealth to their heirs in a tax-efficient manner (i.e. minimising or eliminating estate taxes), and in accordance with their wishes which may not necessarily be in accordance with the laws of the country where they live.

Please note that Trust are not recognised in Spain but if you have assets in the UK or elsewhere in the World an Offshore Trust could still help you.

Provided that the heirs are not resident in the offshore jurisdiction, then there will be no local taxes to pay on the assets or income of the trust. A number of offshore jurisdictions have modified their laws to make their jurisdictions more attractive to settlors wanting to set up offshore trusts.

Most assets can be held by an offshore trust, including bank deposits, investment portfolios, shares and stocks, property (real and intellectual) and life assurance policies.

Offshore Trusts

A Offshore Trust is a Conventional Trust Formed Under the Laws of an Offshore Jurisdiction

If you want to invest offshore, the advice is to opt for at least a three-level arrangement in different ‘jurisdictions’ – a bank account in one, investments in a corporation in another, and a trust in a third – according to whichever jurisdiction has laws that favour the various kinds of investment.

An offshore trust is a conventional trust that is formed under the laws of an offshore jurisdiction; you, as a ‘settlor’, settle assets on the trustees to manage the trust fund for the benefit of a person or persons, called the beneficiaries (which could include the settlor), in accordance with the terms of the trust deed.

Offshore trusts are often used by corporations for employee benefit plans, retirement and stock option schemes, insurance plans and special financing arrangements.

Perpetuities

A perpetuity is an annuity that has no end, or a stream of cash payments that continues forever.

There is a rule against perpetuities which limits the length of time at which all trust property must be distributed, although most offshore jurisdictions have modified their laws to allow a settlor to select lengthy, fixed, perpetuity periods, or have implemented "wait and see" laws, where trusts which have the potential to infringe the rule against perpetuities are no longer automatically invalid, but remain valid unless and until the perpetuity period is breached. However, all recognised offshore jurisdictions, unlike some U.S. states, have stopped short of abolishing the rule against perpetuities.

There are specialised trusts, such as asset-protection, STAR and VISTA offshore trusts, and you risk straying into the world of hedge funds, orphan structures and trusts that fundamentally undermine the nature of a trust. In an area where there is much to lose and legality can be in question, you need the best professional advice. Ask Peter Male for more information on offshore trusts – our Advisors know all the angles.