How much does an Offshore Trust Cost?
An offshore trust is more and more being used in today's globalized world as a legitimate and highly functional tool to safeguard assets and ensure financial security. Although the world of offshore remains a mystery for many, it is a very simple yet effective means to ensure what's yours, stays yours.
Are you looking to find out, how much does an offshore trust cost, you must first understand what constitutes an offshore trust and what makes it different than a domestic trust.
Table of Contents:
- What Is An Offshore Trust Exactly?
- What Are The Different Types Of Trusts?
- Why Do People Choose An Offshore Trust Over A Domestic Trust?
- What Kind Of People Need An Offshore Trust?
- How Much Does An Offshore Trust Cost?
- Is The Cost Of An Offshore Trust Worth It?
- Why Are The Costs Of An Offshore Trust Higher Than A Domestic Trust?
What is an offshore trust exactly?
To put simply, an offshore trust is a legal entity created in a country other than where the settlor and the beneficiary reside.
An offshore trust is a separate entity that creates separation from the trustee and beneficiary so that the assets remain protected from anyone trying to get at the assets. It is also used as an estate planning tool, to protect assets for future generations and diversify holding
What are the different types of trusts?
There are essentially two types of trusts: an onshore trust and an offshore trust, which is the same as a domestic trust and a foreign trust.
A domestic trust is created within a country's legal system, whereas in contrast, a foreign trust is created in a country that is outside of where you legally reside.
Why do people choose an offshore trust over a domestic trust?
The reasons people create offshore trusts are many, but the most common reason is that they have very strong asset protection mechanisms in place as well as the possibility of saving on taxes.
Offshore jurisdictions, such as the Nevis and the Cook Islands, offer trust creators the opportunity to establish trusts that are exempt from taxes. However, this does not mean that you are exempt from paying taxes in the country where you live.
You are obligated to pay taxes to your home country's government, where your tax obligations will be dependent upon where you live and the CFC laws that are in place.
An offshore trust is an excellent tool to protect assets from creditors and for estate planning purposes.
The Cook Islands is home to the world's strongest asset protection trusts. The country, located in the south pacific, is a stable, well-regulated jurisdiction with a reputation for excellent service.
What kind of people need an offshore trust?
If you work in a high-risk profession, such as a doctor, politician, or public personality, then asset protection is something you can not afford to do without.
Being exposed to high-risk environments, whether that is in the operating room or the public limelight, means that you are exposed to more people who could go after you.
There are any number of malicious actors out there in the world. Being in the public eye makes you a target. The only way to protect yourself is to create a layer of separation and protection around those assets so that you will have many safeguards when trouble comes looking for you.
Having a failsafe enables you to have a backup plan in case of a messy divorce, for estate planning, in case of malicious creditors, frivolous lawsuits, or any other type of situation where you have people who want your money.
Even if you are not a high net worth individual, having a trust is something that still might be for you. Let's take a look at the costs to set up an offshore trust.
How much does an offshore trust cost?
An offshore trust can cost anywhere from 10,000-50,000USD if you are using a US attorney.
Offshore Protection is a Panama-based law firm and can create offshore trusts for 5,000-10,000 USD. We can guarantee that you will not be able to find prices like this, as we use geographical arbitrage to be able to offer prices that are difficult to match if you are a US-based attorney who can charge double to triple the rates.
Other popular trusts that we create is the Nevis Trust which can cost between 5,000 - 10,000USD and a Cook Islands Trust which can cost between 10,000-15,000USD.
How can we charge those prices?
As we are based in Panama, lawyer fees are much less than they are in the United States. We have been creating trusts for over 25 years and have established connections in the major offshore centers in the world. And because of the long trusted relationships and continued business with out partners, we are able to offer very competitive prices.
Is the cost of an offshore trust worth it?
An offshore trust is definitely worth the extra cost. So much so that we do not even make domestic trusts as they just do not have the same type of protection mechanisms as offshore trusts.
There are a number of distinguishable features that differentiate domestic trusts from offshore trusts, which are beyond the scope of this article; however, we can say that foreign trusts offer greater asset protection, privacy, and barriers that prevent creditors from bringing frivolous lawsuits to court.
This understandably makes foreign trusts much more appealing, despite, offshore trust coming with a higher price tag.
Why are the costs of an offshore trust higher than a domestic trust?
An offshore trust is more expensive than a domestic trust because you need to hire a foreign trustee and must adhere to and fulfill all of the requirements needed in a foreign jurisdiction which does cost extra.
In terms of annual costs, you will have to pay a government fee, as well as a trustee which usually has annual fees, together with a protector if that is required.
Further customization of the trust such as the use of multi-layered company/trust formations or the use of a foundation/trust structured in different countries, will also add to the overall costs.
Other legal services such as the use of signatories and nominees can also be an extra expense.
To see if an offshore trust is right for you, get in touch for a free consultation where we can help see if going offshore is a solution for you.