In
some cases, investors will actually design their irrevocable trust to expire
after five or ten years in order to prevent themselves from becoming victim of
medical bankruptcy. Assets can also be protected by this type of trust because
the trust maker gives up complete control over and access to the assets and
creditors are not able to deplete the funds.
Offshore Trusts
Offshore
trusts are another way that investors are keeping their funds safe in a
volatile environment. An offshore trust is formed under the laws of an offshore
jurisdiction. Low taxes and lightly regulated jurisdictions apply to the trusts
that many commercial and corporate businesses use to hold their assets. The
arrangement begins when a trust is settled with an offshore institution where
favorable secrecy and trust laws have been applied. Entrepreneurs and
corporations especially enjoy using this type of trust because it becomes
virtually impossible for another person to raise a claim on their asset if they
are brought to court.
The
trust involves three parties: the grantor or settler, the trustee, and the
beneficiary. The grantor or the settler is the entity that settles the trust.
He or she will transfer assets and properties to the trust. The trustee becomes
the legal owner of the assets that the grantor has transferred. The grantor can
be in the form of an institution, company or individual and must still file a
tax return to the IRS regarding the trust.
The
trustee is an institution or person who accepts the trust and becomes the legal
owner of the assets under the trust. He or she has the responsibility to take
care of the beneficiaries of the trust, according to the contract written up
and agreed upon by the grantor and the trustee.
The
beneficiaries, who could be an individual, company or institution, are those
who collect the payment and other benefits from the trust. The beneficiary must
also still file a tax return to the IRS regarding the income they received from
the trust.
Financial
centers, such as the Bahamas ,
the Channel Islands, the Cook Islands and the Cayman
Islands are ideal places to settle a trust because of the lenient
laws that protect these institutions.
To
best determine if an offshore trust is advantageous for your situation, here
are the benefits to establishing an offshore trust.
1.
The
trust will be subject to little or no taxation if the trustees, grantor and
beneficiaries are residents of another country. Therefore, the value of the
trust will accumulate at a greater rate and assets will be protected from any
future taxation changes. A large number of offshore jurisdictions have also
avoided double taxation based on their agreements.
2.
An
offshore trust is a private and confidential arrangement between the grantor
and trustees. The trustee doesn’t have to disclose the names of the grantor or
the beneficiaries to any type of legal authority. Documents about the trust
don’t have to be registered or made available to anyone for public knowledge.
3.
Some
offshore jurisdictions have low depository requirements that can prove to be
extremely useful to those who don’t plan on depositing large sums.
4.
The
protection of the grantor’s estate from governmental interference is another
advantage of this trust.
There
are just a couple disadvantages to establishing an offshore trust:
1.
Some
non-supporters believe that it may be difficult to conduct transactions to
these remote islands and countries. However, there has been an increase in the
use of technology to make these transactions simple and safe.
2.
The
cost to prepare and claim an offshore trust is a little higher and there are
mandatory trustee fees that must be paid each year.
copyright Brad Richdale 2010 all rights reserved
blog by Bradford Richdale
story also found at Brad Richdale Customer Reviews
copyright Brad Richdale 2010 all rights reserved
blog by Bradford Richdale
story also found at Brad Richdale Customer Reviews
