Why set up an offshore trust

Why set up an offshore trust

An offshore trust is essentially a conventional trust that is formed under the laws of an offshore jurisdiction. Although there are numerous similarities with conventional trusts, offshore trusts generally offer a greater number of advantages to individuals. Certain jurisdictions are better known for their favorable offshore trust laws, thus making them extremely attractive to international investors.

EFSAG are experienced in offshore trust formation, and can assist you with the formation of your trust in the jurisdiction of your choice. To learn more, please view our Offshore Trusts services page.

Features of an offshore trust

There are numerous reasons why people choose to set up an offshore trust. Generally speaking, trusts offer enhanced asset protection to investors, as the ownership of assets is transferred from the original owner to the trust. A deed is created, which specifies the assets contained within and how those assets will be distributed upon the request of the settlor (the individual who has chosen to establish the trust).

Many people choose to go offshore for the formation of their asset protection entity, as many offshore jurisdictions offer enhanced benefits. For example, some locations enable complete exemption from taxes, meaning that the assets will not be taxed either whilst under the ownership of the trust or upon their transfer to the beneficiaries.

Offshore trusts also offer enhanced financial privacy and protection. Many jurisdictions, including Switzerland and Belize, feature stringent rules specifying that any information related to the entity must remain entirely confidential, and cannot be disclosed to external creditors under any circumstances. This affords total privacy, as it is not possible to discover who the owner of the assets is, or subsequent beneficiaries.

When establishing a trust the settlor can select a range of tangible and intangible assets to place in the deed. A trustee must be appointed, who is responsible for managing and administering the entity in compliance with the settlor’s wishes, and beneficiaries must be specified, who will ultimately inherit the assets as directed by the settlor.

It is of primary importance to research the features, rules and legislations of offshore jurisdictions prior to establishing any asset protection entity. In addition, gaining the advice and guidance of a professional consultancy firm is vital, and will assist in the decision making process.