What is a trust?
A Trust can exist to hold assets for the benefit of certain persons or entities, with a trustee managing the trust (and holding title on behalf of the trust). Most trusts are founded by the persons (called grantors, settlors and/or donors) who execute a written declaration of trust which establishes the trust and spells out the terms and conditions upon which it will be conducted. The declaration also names the original trustee or trustees, and successor trustees. The assets of the trust are usually given to the trust by the creators, although assets may be added by others. During the life of the trust, profits and, sometimes, a portion of the principal (called “corpus”) may be distributed to the beneficiaries, and at some time in the future (such as the death of the last grantor or settlor) the remaining assets will be distributed to beneficiaries in accordance with the terms of the trust. A trust avoids probate (management of an estate with court supervision) by providing for distribution of all assets originally owned by the trustors or settlors upon their death.
What is an offshore trust?
An offshore trust is created when assets are transferred to a trustee in an offshore jurisdiction. 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
- 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.
- In Belize there are no “forced heirship” provisions.
Offshore trust solutions for individuals
An offshore trust is the solution for individuals who:
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 centralized reporting
Want to minimize or eliminate estate or inheritance taxes arising on the death of the Settlor in their home countries.
Why establish an offshore trust?
When a trust is established in a suitable offshore jurisdiction, provided that residents of the offshore jurisdiction are not beneficiaries of the offshore trust, then there will be no local taxes applicable to the assets and income of the trusts, regardless of where such income is earned.