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  Offshore Trusts

Safeguarding wealth for generations using offshore trusts

Overview

Advantages of Offshore Trusts

Offshore Trust Solutions for Individuals

Different Types of Trusts

Why you should choose Acorn Business Services Consultancy

Offshore Trust Overview

An offshore trust is created when assets are transferred to a trustee. The trustee becomes the legal owner and is responsible for managing the assets and distributing them to the beneficiaries of the offshore trust (which could include the person or corporation which transferred the assets to the trustees) in accordance with the terms of the trust deed.

The terms on which the Trustees administer the trust assets are detailed in a trust deed and trust legislation to govern trusts has been enacted in many common law jurisdictions.

What assets can be held by an offshore trust?

  • Shares and stocks in both quoted and unquoted companies.
  • Investment portfolios.
  • Real and intellectual property.
  • Bank deposits.
  • Life assurance policies issued on the life of the Settlor.
  • Most other types of asset

The Advantages of Offshore Trusts

  • Private relationship, for example, in the Isle of Man offshore trust deeds are not publicly registered.
  • Wealth protection.
  • Tailored to specific family requirements.
  • Recognized in all common law jurisdictions.
  • Increasing recognition in important civil law jurisdictions.
  • An important tool in international income, capital gains and estate tax planning.
  • Used by corporations for employee benefit plans, retirement and stock option schemes, insurance plans and special financing arrangements.

Offshore Trust Solutions for Individuals

A trust is the solution for individuals who:

  • Want to preserve their wealth against uncertainty, political, economic or family.
  • Want to transfer wealth to their heirs in a tax-efficient manner. They want to plan their estate to maximize the benefits of their wealth for family members and others.
  • Want to transfer wealth to their heirs in accordance with their wishes and not in accordance with the laws of the country where they live.
  • Want to consolidate the ownership of assets owned throughout the world in one location.
  • Want centralised reporting
  • Want to minimise or eliminate estate taxes arising on the death of the Settlor.

Why establish a trust offshore?

When a trust is established in a suitable offshore jurisdiction, provided that residents of the offshore jurisdiction are excluded from receiving benefit from the offshore trust, then there will be no local taxes applicable to the assets and income of the trust.

 

Different Types of Trusts

Trusts have their origins in medieval England when they were associated with knights making provision for their families when they went away to fight in the Crusades.

An offshore trust enables an individual (the "settlor") to donate assets to a neutral third party or guardian (the "trustee"), who holds the assets and administers them for the benefit of other individuals nominated by the settlor and in many cases the settlor himself (the "beneficiaries"). An offshore trust arrangement is normally recorded in a written document (the "trust deed").

The effect of creating an offshore trust is to shift the burden of property ownership onto a trustee, while retaining the benefit of the property for the beneficiaries.

An estate created under the will of a deceased person is a trust. A trust created by a person prior to death is known as an inter vivos trust. Most trusts created offshore are formed as inter vivos trusts.

As trusts are a creation of English common law, the most suitable location for an offshore trust is a jurisdiction which has English common law and equity as the foundation of its legal system.

An offshore trust may be established as either revocable or irrevocable. A revocable trust may be terminated or varied by the Settlor either at the end of a specified period or at any time. An irrevocable trust cannot be terminated by the Settlor nor can the Settlor vary the terms of the trust. Whether a trust is established as revocable or irrevocable will depend upon the objectives and circumstances of the Settlor.

Both revocable and irrevocable offshore trusts may be either discretionary or fixed interest trusts. Under a fixed interest trust the interests of the beneficiaries are specifically fixed in the terms of the trust deed and the trustee has no power to vary those interests. A discretionary trust on the other hand gives the trustee the power to determine the allocation of income and capital amongst the members of the beneficiary class and to vary the membership of the beneficiary class. The flexibility provided by the discretionary form of trust is often necessary to satisfy tax planning objectives.

In the case of a discretionary trust, the trustees will have wide discretionary powers (although they may sometimes be constrained by the requirement for the consent of a third party or the protector), the trust deed will often be supplemented by an informal and confidential letter from the settlor or grantor to the trustees setting out his wishes on such matters as the amount and timing of distributions, investments, employment of advisers, those who should be regarded as primary beneficiaries and so forth. While this letter is non-binding and intended for the trustees' guidance only, the trustees will generally respect the settlor or grantor's wishes and strive to act in accordance with them.

Most offshore trusts fall into four broad categories:

·         Private: including discretionary, accumulation and maintenance, life interest and fixed interest trusts

·         Corporate: including pension and employee benefit trusts.

·         Charitable: solely for the benefit of charitable organisations.

·         Purpose: trusts with no beneficiaries that are established for purposes that are certain, reasonable and possible

Modern offshore trust deeds can be tailored to meet your specific requirements. Generally they are worded in the widest possible terms to allow a trustee scope to respond to changing circumstances and requirements.

Discretionary Trusts

The most flexible form of offshore trust and used in wealth protection and tax planning. A discretionary offshore trust will normally allow the Trustees to appoint additional beneficiaries or to remove existing beneficiaries, and will usually also allow the Trustees to distribute the income and capital of the trust to the beneficiaries in varying amounts and at various times. When a Settlor establishes a discretionary offshore trust he will generally provide the Trustees with a Letter of Wishes, which provides guidance to the Trustees on how he would like them to administer the trust and manage the assets.

Interest in Possession Trusts

These differ from discretionary trusts in that the beneficiaries will be entitled to receive income and capital from the trust as detailed in the trust deed.

Accumulation and Maintenance Trusts

Almost always established for the benefit of children. The offshore trust deed will specify that the trust fund be used for the education and maintenance of the children up to a certain age with surplus income being accumulated by the offshore trust. Once a predetermined age has been reached the beneficiaries will be entitled to receive income and capital from the offshore trust as detailed in the trust deed.

 

Why you should choose Acorn Business Services Consultancy

Once you have decided to set up an offshore trust, your first and most important decision is the choice of trustee and you will want a trustee that gives you complete peace-of-mind.

The benefits of selecting Acorn Business Services Consultancy Worldwide as the trustee include:

  • Independence - Acorn Business Services Consultancy Worldwide has no conflicts of interest. Our trustees always act in the best interests of the beneficiaries of the offshore trust. We do not compromise that position. Thus, independence from investment, legal or accounting advisors is critical and should be an absolute requirement by persons seeking to establish a trust.
  • Service - Acorn Business Services Consultancy Worldwide looks to the long term, not the short term. Acorn Business Services Consultancy Worldwide understands that its success is based on the maintenance of long-term personal relationships and trust.
  • Expertise - The provision of offshore trust services is not a purely mechanical and administrative role. Judgement and expertise are required. Trust law is a complex and demanding area of the law. Acorn Business Services Consultancy Worldwide has the requisite legal and accounting infrastructure to maintain a high level of professional expertise.
  • Size and substance - Acorn Business Services Consultancy Worldwide has been providing trustee services for over years. We are a professionally managed company. Compliance, corporate governance and the pursuit of quality are fundamental to everything we do. Our approach to business and client matters is prudent.
  • Value - Many believe that the costs of establishing and administering an offshore trust are prohibitive. It is true that many of the major banks and other financial institutions make sizeable charges for setting up an offshore trust and receive a percentage of the trust assets in annual administration fees. Our level of fees is generally much more reasonable and provides access to trusts to those with relatively modest assets. As all cases are different, fees will be different, but they are probably a lot less than you thought.

 


 
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