Offshore Trust
We would like to take the opportunity to explain the tangible benefits of setting up an offshore trust and clarify some of the questions that have arisen in recent years.
Offshore trusts have recently lost some of their popular appeal as an offshore business option, after attracting greater scrutiny and increased pressure for reporting purposes by European and American governments. Foundations on the other hand, such as the ones offered in Panama, have become a more sought after creative business option, mainly due to the similar benefits they offer, but with a much lower profile in terms of offshore asset/protection structures.
Having said that, trusts do have some exceptional benefits for offshore financial services due to the ease in which they can be changed and transferred to other jurisdictions. The testamentary trust is one of the most favored with its provisions for transference of assets at pre appointed times, such as death; it has no reporting prerequisites as no assets have been attached to it prior to this time.
Part of our service is to supply this form of offshore option and any other type of trust and tailor it to the specific needs of the holder of the assets, and also help in re-domiciling trusts to Panama.
What are contractual trusts and what are their uses?
The simple definition of a trust is that it is a privilege, real or personal being held by a person(s) for the benefit of another. It is, to all intents and purposes, a contract between parties to hold assets in trust for one or more beneficiaries. These are known as common law trusts and are an effectual way of avoiding having to pay high inheritance taxes.
A contractual trust can be what is known as a non-grantor trust and formed under the aforementioned common law rights. Most of these are now statutory provisions. This Trust ensures that it is not treated as a corporation, which is taxed according to the rules the specific country it relates to.
There are four key areas that a trust must avoid: it should not have
- Centralized management structures
- Life continuity
- Limited liability for trustees
- Ease of transfer of interest to beneficiaries
Failing any three of these will merit the entity being taxed as a corporation. Therefore, we only concentrate on trusts that adhere to an English common law background (which includes the USA and most European countries) that compliment countries such as Panama which engender a territorial taxation system. Countries like Panama and Nevis are prime examples of safe offshore domiciles.
A contractual trust can be referred to under other titles such as a Pure Trust, Common law Trust, Contractual Company or a UBO; these are, to all intents and purposes, the same thing as long as they are genuine irrevocable trusts.
We hope the above explanation has shed some light on the purpose and regulations surrounding this form of provision. We would be delighted to discuss this further to ensure you have a clear understanding and insight into this and determine if this option gives you the potential advantages it has to offer. Please feel free to contact us by clicking…