Why Set up an Offshore Trust?
There are any number of reasons why you might want to open an offshore trust. Shielding your assets works by creating an extra layer of protection around your wealth.
Whether a trust is being used for family planning or lawsuit protection, whatever the reason, it will give you better asset security, tax savings, and will increase your capacity to invest in foreign markets.
In today's word asset protection is a necessity.
Wherever you live in the world, having a safe jurisdiction outside the country where you reside is an important yet often overlooked factor when looking into trust formation.
The problem with a domestic trust is that local court rulings can easily break into the trust, whereas foreign trusts have asset protection clauses that make it impossible for firing creditors to make a claim against the trust from outside the country.
Consequently, the potential creditor can not pursue the trust within your home country bust must do so within the jurisdiction where the trust is located. Such barriers to entry (amongst others) help ensure that only the most persistent individuals will likely see through any claim.
An asset protection foreign trust offers some of the following benefits that include:
- Financial Privacy
- Protection of wealth
- Statute of limitation
- Protection from Foreign Court Rulings
- Family planning
- Tax planning
While there are a number of offshore trust destinations that are available, there are three countries in particular where we set up the majority of the international trusts. The Cook Islands, Nevis and Belize are perhaps the most popular foreign trust formation structures in the world.
And for good reason, as they offer a number of benefits that you will not find domestically.
1. Cook Islands Trust
The Cook Islands trust in the world's best foreign asset protection structure to safeguard your assets. The Cook Islands International Trust Act 1989 was the first country in the world that incorporated strong asset protection features within the legislation, making it a standard for other countries in the world to follow.
Nearly 10% of the country's GDP comes from forming trusts, making the government increasingly dedicated to ensuring the stability of the industry. The Cook Islands has several barriers to entry that prevent the wrongful claim or seizure of assets by unlawful creditors.
The Cook Islands also provides a number of benefits including:
- Corporate laws do not recognize foreign judgments forcing any creditor to file a claim within the country in order for any claim to be recognized
- Both the beneficiaries and the settlor have the protection of complete anonymity under the statues that safeguard the details of anyone who has entered into the trusts' structure
- Statute of limitations is one year to prove fraudulent conveyance
- Creditors must prove the assets were placed in the trust intentionally to defraud the particular creditor
- The trust can hold a broad range of assets classes including, accounts, investments, real estate
- All claims against the trust must be made in person within the country and as the Cook Islands is geographically isolated only the very diligent creditor will seek to follow the claim
- The trust structure is tax neutral
- Best asset protection legislation in the world
- A trust used in combination of an LLC gives you complete control over your assets
- Long-standing record of trust integrity
The legal precedent established by the Cook Islands trust guarantees its impenetrability. Any such real protection arrangement is only so good as it stands the test of time. The Cook Islands have such difficult measures in places that it is world renowned, making it nearly impossible for the trust to be broke.
Establishing a trust in a country that has a precedent for upholding the statues of a trust is incredibly important, especially in comparison to a domestic jurisdiction where the laws might be either newly established or not time tested and therefore may not carry the same guarantee.
2. Nevis Trust
After the Cook Islands, a Nevis Trust is often considered as the next best place to form a foreign trust. Like The Cook Islands, it has many of the same benefits in its asset protection legislation.
Nevis Trust has several notable benefits including:
- The settlor can also be the beneficiary (meaning the owner who creates the trust can also be the one who benefits from the trust)
- Trusts are allowed to be split or combined
- The trust can hold many different types of assets
- A Nevis trust can exist indefinitely
- Assets can not be broken into by any members of the trust against the beneficiaries will even if under legal duress from a creditor
- Must have a strong burden of proof that the assets were fraudulently transferred in order to move forward a claim
- Nevis courts do not recognize foreign court orders; any legal action taking against a Nevis trust must be made within the country
- There is a short statute of limitations (depending on the case it is 1-2 years) meaning claims that a fraudulent transfer was made into the trust must be made within the time frame
- Any creditor looking to file a claim against the trust must post a 100,000 USD bond before bringing any legal action against the trust
- Deposit is forfeited if legal claims prove to be false and must reimburse legal fees for the trustee
- Creditors must bring the case forward to local Nevis courts (including legal representation)
The most potent form of asset protection is combining a Nevis Trust with an LLC which can hold investments or accounts and gives an added layer of protection.
3. Belize Trust
A Belize Trust has been an industry-standard formation structure for many years. It is often touted by many offshore providers as one of the best trusts in the world. The Trust Act of Belize was formed in 1992 which was amended again in the Belize Trust Act 2007 which further strengthen fraudulent conveyance clauses.
Some of the notable Belize Trust advantages include:
- Tax-free entity
- Trusts are limited to 120 years; whereas charitable trusts are unlimited
- Belize trust details are not open to the public
- Provisions protect assets from reciprocal enforcement of the judgment
- Fees are much lower than Nevis and Cook Islands
- Great estate planning provision to avoid forced heir and inheritance taxes
- Complete confidentiality guaranteed under Belize law
Whatever jurisdiction you chose, you can be assured that you can not go wrong with any of these three countries which together provide the world's best asset protection offshore possibilities.