For concerned readers of SOC and concerned Americans the land over; you need to look into all legal avenues at your disposal to protect and grow your monetary assets. The coming financial storm is going to shake a lot of people out and only the people who see it coming will be able to protect themselves. Read, learn and act.
Everything You Always Wanted to Know about Offshore Trusts
Today's comment is by Bob Bauman, our Legal Counsel, author of many books and reports on the offshore world, and a former Member of the United States House of Representatives.
Dear A-Letter Reader,
In recent decades, the ancient asset protection tool - the trust - has gained wide popularity among astute people of wealth. But what exactly is a trust?
Let's start by defining it. A trust is a legal arrangement where one person controls property donated by another person for the benefit of a third person. Basically, you legally give your assets away to another person to ensure those assets are protected.
This independent legal entity is most often used for protecting assets from creditors, reducing excessive estate taxes and protecting financially irresponsible loved ones.
There are hundreds of variations on the basic three-party trust agreement. A trust may be created for any purpose, as long as it's not illegal. So anyone can create a trust designed specifically to meet any number of needs. For example, a trust can:
Conduct a business
Hold title to and invest in real estate, cash, stocks, bonds, negotiable instruments and personal property
Provide for minor children or the elderly
Pay medical, educational and other expenses
Make financial support available in an emergency, for retirement, during marriage or divorce, or even carry out premarital agreements
Protect your home and family while lowering burdensome inheritance taxes and avoiding the muddle of the probate court process when used as an estate planning vehicle.
The Choice for Privacy
If you value your privacy, a trust is an excellent choice. Even though your trust must be officially registered and you must file your U.S. tax returns, the inner-workings of your trust are shielded from public view.
While the fact you created a trust is "on the record," names of grantors and beneficiaries are not necessarily revealed. Also, trust assets are strictly private unless the trustee is authorized by the trust declaration terms to make such disclosures, or unless a court orders it.
The Who's Who of a Trust Relationship
A trust's parties include the grantor who creates a trust. If you decided to set up a trust, you would be the "grantor." In the trust agreement, you would define your wishes for your trust's management. Then you would supply the trust with the assets to be managed.
The trustee is the person (or company) who administers the trust. If you wish, more than one trustee can hold legal title to your trust's property and manage the assets as long as the trust exists. If the trust outlasts the trustee for any reason, someone else is assigned to serve as successor trustee. The trust declaration usually provides an alternate trustee or a method for choosing a new trustee.
The trust's beneficiary is the third member of the trust relationship. If you set up a trust, you would name the beneficiary (for example: a significant other, a child, business partner, etc). The beneficiary receives distributions from the trust assets, and holds the equitable title to those trust benefits. The beneficiary does not own or have the right to control any of those assets.
Why Offshore Trusts Are in Demand
In recent decades, offshore asset protection trusts (APT) have become especially popular in wealthy circles.
An offshore asset protection trust is a specialized form of trust you create under the laws of a foreign nation, while residing somewhere else. You register your offshore trust in that foreign nation, and set up its base of operations there.
From that point on, your trust is governed by the laws of the nation where it's registered or administered. By being in another nation, your trust serves as a shield for your business and personal assets, deflecting home country creditors, litigation and potential financial liabilities.
The offshore APT is an excellent platform from which to diversify investments. The APT permits access to some of the world's best investment opportunities, without concern about your home nation's legal restrictions. An offshore APT can also purchase attractive insurance and annuity products not available in the U.S. and other nations.
Many investment funds based offshore are denied to U.S. persons because foreign fund managers don't want the bother and cost of complying with the massive registration requirements imposed by U.S. laws. But foreign securities sales can be made to any "non-U.S. persons" and that may include an offshore trust created by a U.S. grantor. Certain types of guaranteed funds, not permitted in the U.S. but long a part of European investing, are only available for purchase through an offshore trust or international business corporation (IBC).
Where to Shop for Your Offshore Trust
Many offshore tax havens specialize in the creation and administration of offshore asset protection trusts.
What the corporation-friendly state of Delaware is to U.S. companies, these nations are to asset protection trusts. Many are well-developed, globally recognized financial centers. They boast modern, efficient banking, legal and other professional providers who understand and make their living servicing APTs and offshore finance in general.
Some established APT haven nations include Panama, Belize, The Bahamas, Nevis (half of the Federation of St. Kitts and Nevis), and the British overseas territories of the Cayman Islands, the British Virgin Islands, the Turks and Caicos Islands, and Bermuda.
In Europe, there is Liechtenstein and Gibraltar. There are the Cook Islands in the south Pacific. Also noted for favorable trust laws are the U.K. Crown dependencies in the Channel Islands, Guernsey, Jersey and the Isle of Man.
For more information about trusts in general and APTs in particular, click here.
Today's comment is by Bob Bauman, our Legal Counsel, author of many books and reports on the offshore world, and a former Member of the United States House of Representatives.
Dear A-Letter Reader,
In recent decades, the ancient asset protection tool - the trust - has gained wide popularity among astute people of wealth. But what exactly is a trust?
Let's start by defining it. A trust is a legal arrangement where one person controls property donated by another person for the benefit of a third person. Basically, you legally give your assets away to another person to ensure those assets are protected.
This independent legal entity is most often used for protecting assets from creditors, reducing excessive estate taxes and protecting financially irresponsible loved ones.
There are hundreds of variations on the basic three-party trust agreement. A trust may be created for any purpose, as long as it's not illegal. So anyone can create a trust designed specifically to meet any number of needs. For example, a trust can:
Conduct a business
Hold title to and invest in real estate, cash, stocks, bonds, negotiable instruments and personal property
Provide for minor children or the elderly
Pay medical, educational and other expenses
Make financial support available in an emergency, for retirement, during marriage or divorce, or even carry out premarital agreements
Protect your home and family while lowering burdensome inheritance taxes and avoiding the muddle of the probate court process when used as an estate planning vehicle.
The Choice for Privacy
If you value your privacy, a trust is an excellent choice. Even though your trust must be officially registered and you must file your U.S. tax returns, the inner-workings of your trust are shielded from public view.
While the fact you created a trust is "on the record," names of grantors and beneficiaries are not necessarily revealed. Also, trust assets are strictly private unless the trustee is authorized by the trust declaration terms to make such disclosures, or unless a court orders it.
The Who's Who of a Trust Relationship
A trust's parties include the grantor who creates a trust. If you decided to set up a trust, you would be the "grantor." In the trust agreement, you would define your wishes for your trust's management. Then you would supply the trust with the assets to be managed.
The trustee is the person (or company) who administers the trust. If you wish, more than one trustee can hold legal title to your trust's property and manage the assets as long as the trust exists. If the trust outlasts the trustee for any reason, someone else is assigned to serve as successor trustee. The trust declaration usually provides an alternate trustee or a method for choosing a new trustee.
The trust's beneficiary is the third member of the trust relationship. If you set up a trust, you would name the beneficiary (for example: a significant other, a child, business partner, etc). The beneficiary receives distributions from the trust assets, and holds the equitable title to those trust benefits. The beneficiary does not own or have the right to control any of those assets.
Why Offshore Trusts Are in Demand
In recent decades, offshore asset protection trusts (APT) have become especially popular in wealthy circles.
An offshore asset protection trust is a specialized form of trust you create under the laws of a foreign nation, while residing somewhere else. You register your offshore trust in that foreign nation, and set up its base of operations there.
From that point on, your trust is governed by the laws of the nation where it's registered or administered. By being in another nation, your trust serves as a shield for your business and personal assets, deflecting home country creditors, litigation and potential financial liabilities.
The offshore APT is an excellent platform from which to diversify investments. The APT permits access to some of the world's best investment opportunities, without concern about your home nation's legal restrictions. An offshore APT can also purchase attractive insurance and annuity products not available in the U.S. and other nations.
Many investment funds based offshore are denied to U.S. persons because foreign fund managers don't want the bother and cost of complying with the massive registration requirements imposed by U.S. laws. But foreign securities sales can be made to any "non-U.S. persons" and that may include an offshore trust created by a U.S. grantor. Certain types of guaranteed funds, not permitted in the U.S. but long a part of European investing, are only available for purchase through an offshore trust or international business corporation (IBC).
Where to Shop for Your Offshore Trust
Many offshore tax havens specialize in the creation and administration of offshore asset protection trusts.
What the corporation-friendly state of Delaware is to U.S. companies, these nations are to asset protection trusts. Many are well-developed, globally recognized financial centers. They boast modern, efficient banking, legal and other professional providers who understand and make their living servicing APTs and offshore finance in general.
Some established APT haven nations include Panama, Belize, The Bahamas, Nevis (half of the Federation of St. Kitts and Nevis), and the British overseas territories of the Cayman Islands, the British Virgin Islands, the Turks and Caicos Islands, and Bermuda.
In Europe, there is Liechtenstein and Gibraltar. There are the Cook Islands in the south Pacific. Also noted for favorable trust laws are the U.K. Crown dependencies in the Channel Islands, Guernsey, Jersey and the Isle of Man.
For more information about trusts in general and APTs in particular, click here.
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