Offshore Trust

Offshore trusts are formed in the offshore tax havens. An offshore trust is an entity which is set up for safeguarding assets on behalf on beneficiaries. Offshore trust formation takes places in the following offshore tax havens; Dominica St Kitts & Nevis, Belize, Panama, Seychelles, Anguilla, Cyprus and many others.

Offshore trusts are used as asset protection tools. The assets which are transferred to an offshore trust for formation belong to the offshore trust and not an individual or corporation. Assets owned by an offshore trust are protected by strict laws in the offshore jurisdictions which make it difficult for creditors, litigators and other parties to claim any stakes in these assets if cases are brought against the settlor of the offshore trust. An offshore trust can own real estate, capital, stock, shares, art and any other type of asset.

Offshore trusts are free from local taxes in the offshore tax havens; therefore offshore trusts are perfect offshore investments. Offshore trusts can be used for tax planning reducing liabilities paid on assets. Offshore trust legislation removes all forms of local taxation on assets which an offshore trust owns outside of the offshore tax haven. Tax exemptions are given on capital gains tax, transfer taxes, stamp duty, income tax and withholding tax. A registration fee is required when offshore trust registration is taking place. Additionally an annual fee is paid for trust maintaining in the offshore tax haven. The fees paid is determined by the offshore jurisdiction which s chosen for trust formation.

Offshore trust benefit from privacy laws. The assets registered with the offshore trust are not known to the public and the names of the beneficiaries and other trust officials also remain private. Since offshore trusts do not pay local taxes there is no need to file financial statements with the local tax authority at the end of the financial year.

Offshore legislation permits the formation of charitable and non charitable trusts in the offshore jurisdictions. The offshore trusts have a maximum duration time of one hundred and twenty (120) years. The offshore trust can appointed no less than four trustees. Some offshore jurisdictions allow corporate trustees.

A trust can be set up to function as a will. The trustee will receive instruction on how and when the offshore trust assets will be divided among the beneficiaries. The letter of wishes is written by the trust settlor and will also determine how the assets of the offshore trust will be managed. Offshore trust formation involves registering a Trust Deed. The requirements are listed below.

  • A proposed name for the offshore trust
  • The name and address of the registered agent employed to register the offshore trust
  • The assets to be registered with the trust
  • The names and addresses of the trustees
  • The names and addresses of the beneficiaries to the trust
  • The date at which the trust should be dissolved or under what circumstances the trust will be dissolved
  • State the type of trust to be registered.

Offshore trusts are one of the offshore investments which help protect assets. The formation of an offshore trust is most frequently done for the asset protection which offshore trusts provide.

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