Assets Protection: Benefits of Offshore Trusts

Assets protection by parking them in an offshore trust can be the best shield against aggressive competitors, raiders, and adverse economic/political situations in today’s world. 

However, this great idea’s efficiency depends on your choice of a safe jurisdiction and resolution to set up your private trust there. 

Asset protection offshores

Offshore assets protection trusts are created under the laws of a foreign country to legally safeguard stocks, bonds, real estate or the title, business interests, intellectual property rights, collectibles, professional practices, any type of asset with value. After you transfer some of your assets into a trust administered by an independent trustee (an individual, a bank, or a company), your wealth will be beyond the reach of most threats. As a beneficiary, you can receive occasional distributions. Trusts may even shield the assets for your children.

The main building blocks in the impassable barrier against devastating alienation or seizure of your assets are the timely design of a well-planned structure and arrangements for the highest possible level of confidentiality. 

Our Offshore Pro Group experts are highly experienced and qualified in offshore companies’ formation (a trust, a foundation, or a limited liability company).  Moreover, they are ready to design and help you build a neat offshore entity that will property shelter your assets and provide impervious protection. 

We will focus on your aspirations and concerns to hand-pick and recommend the best time-tested options for diversification of location and holdings through registration of your legal entity in the best offshore zones.

To contact us, please write to the e-address given at the top of this page. 

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Offshore Trusts for Assets Protection 

Offshore assets protection is a mix of measures to achieve the maximum financial security of assets by means of offshore companies. 

As a rule, such legal entities are registered in a jurisdiction with a more business-friendly legal environment than the regulations in the owners’ tax residency/home country.  

Here are the top 5 benefits that foreign investors and entrepreneurs seek when setting up offshore asset protection trusts:

1

The anonymity of personal and financial data in court proceedings in case of divorce or illegal takeover attempts by relatives of high-ranking officials (raiding).

2

A legal way to avoid lawsuits of any kind related to a divorce, actions for damages, professional malpractice, etc.

3

Legal separation of the personal assets and liability of the beneficiary from the assets and liabilities of his/her offshore corporate entity.

4

Protection of assets from lien, or any judgment rendered outside the offshore jurisdiction, as most offshore jurisdictions conduct judicial settlement of disputes according to their national legal system.

5

The significantly lesser vulnerability of the owner’s real estate and other valuable assets in case of defaulted loans. 

The transfer of assets to a secure location is often associated with the desire to avoid corruption and political persecution in one’s home jurisdiction. In most cases, investors prefer to use an offshore trust or offshore fund with trust management. The flexible corporate law of most offshore jurisdictions allows avoiding many other mistakes if your trust is structured properly in a good jurisdiction. 

A proper structure is the most important guarantee that the trust and the trust deed can provide the ‘bulletproof’ asset protection. But you need to resort to professional experts.

Offshore Jurisdictions for Assets Protection

The mere ownership of an offshore company in Cyprus, BVI, Nevis, or Belize is not a means to an end. It is not the ultimate protection for your interests and financial health. 

The days are long gone when nearly any offshore company in Cyprus or another low/zero tax jurisdiction served as a refuge for capital. 

What you need nowadays is the design and analysis of individual schemes that will ensure you a double or higher degree of confidentiality. 

The right planning is the foundation of safety. Different trusts serve different purposes. The locations of the trust, assets, beneficiaries, the trustee also impact the efficiency of the protection. It is quite often that foreign investors register a company in one offshore jurisdiction and decide to set up a corporate account with a bank in another country.

However, let us put it straightforwardly: our company does not provide services to clients wishing to hide illegal money or use offshore to evade taxes. Our experts work only with clean capital, that is, with funds on which all taxes have been paid and other obligations have been fulfilled. 

Having stated the importance of proper planning, let us consider some countries where offshore corporate entities can be formed for the most reliable and irreversible assets protection. 

Legal Entity Types Recommended for Registration in Offshore Jurisdictions

JurisdictionsLegal entity typesMain benefits
Bahamas IBC Non-Resident The ideal place to register trusts and investment funds. Maximum protection, maximum anonymity.  
Belize International IBC Non-ResidentIdeal conditions for exports, asset protection, ship ownership  
British Virgin Islands (BVI)IBC Non-ResidentMinimum operating costs, 0% taxes. 
CanadaLTD as a disguise for an agency schemeMinimum tax burden if certain conditions are met.
CyprusResident LLCThe country is interesting for conducting import-export within the EU, the creation of trusts, and investment funds.
Gibraltar Non-Resident LTDJurisdiction for e-commerce, insurance activities, investments. 
Hong KongLTDOptimal jurisdiction for trade activities with Asian countries. 
Ireland LP Company (partnership)  A state with ample opportunities for investment activities. Strongest asset protection plus permission to pay no taxes. 
Isle of Man LTDZero taxes with maximum security of property and capital. Jurisdiction is popular for ownership of private aircraft and ships. 
Liechtenstein AG CompanyA reputable jurisdiction. The highest confidentiality favors the creation of an insurmountable barrier protecting the assets of foreign investors.
Malta LTD resident company Jurisdiction is optimal for the creation of holdings, including the need to protect IP rights. 
Mauritius GBC-I An instrument for international trade, investment, storage of capital.  
NevisNon-resident IBC or resident LLC A country with the highest level of privacy in exports, banking, and insurance. 
Panama Non-resident SA company Optimal for global asset protection, import, and export of products/services.
Seychelles IBC Non-Resident Used to protect assets, ship ownership, the export business. 
Singapore  LTDAsian financial center with a high reputation. Jurisdiction promotes privacy. 
Switzerland AG Company  Reputable jurisdiction for large investment projects with asset protection.

With any trust planning, there are 3 types of jurisdictions to consider: the jurisdiction of registration, the jurisdiction of administration, the jurisdiction of adjudication (in the event of a dispute). The final choice may involve the incorporation of legal entities in several offshore states.

To ensure the maximum financial security, many factors must be taken into account, including the tax residence, the corporate and tax laws, the ultimate business goals, advantages and disadvantages of the registration procedures, other considerations.  

Besides, the availability of the following opportunities should be explored:

  • to register an offshore in a name other than your own (fiduciary service);
  • to use a combination of business entities plus corporate accounts in an offshore bank;
  • to choose jurisdictions that do not participate in any automatic information exchange agreements.

Safety Measures for Asset Protection

The assets safety depends on the following measures to be taken as part of the offshore asset protection trust formation:

1. A foreign business owner/investor designs and registers a properly structured trust to protect offshore assets.

2. To control day-to-day operations, the business owner registers an LLC that is 100% owned by that trust.

3. The LLC manager conducts administrative activities; the investor manages the trust.

4. In the event of a legal challenge, the trustee of the trust suspends the LLC manager for the duration of the proceedings. 

Offshore trust structures that hire an LLC as a trustee are ultimately protected from unscrupulous competitors, aggressive raiders. 

The design and implementation of such constructs will require the qualified assistance of an expert specialized in international law and the offshore industry. We are ready to provide comprehensive legal support and develop a customized plan to protect your assets offshore. 

Advantageous Trust Structures for Asset Protection 

The formation of an offshore company in a country with zero taxation has always been an appealing strategy due to quite flexible laws and the lack of bureaucracy. If the settlor registers an offshore LLC company to use it for management of the trust, it can be a very efficient strategy. The main privileges of such settlements are as follows:

  • The can act as the offshore LLC manager controlling the day-by-day operations of the trust;
  • External courts do not have the power to require the seizure of trust assets placed in an offshore jurisdiction;
  • The owner can win a lawsuit in case of a judicial proceeding since the transfer of assets did not take place;
  • If assets are transferred after the legal dispute/conflict was initiated, the statute of limitations on fraudulent conveyance is 2 years, which is a serious consideration when proving the legitimacy of the investment and diversification method. 

An international offshore trust poses a huge number of obstacles for the legal opponent of your business, as all assets are subject to the laws of another jurisdiction. It is important to choose the right tax-free state or territory, which has the right to resolve tax and other disputes independently (under its own laws). 

Please note that the tax treatment of foreign offshore trusts is quite specific and involves various benefits and incentives in each particular jurisdiction. When choosing a jurisdiction, it is also necessary to take into account whether the trust will generate income from any type of activity or be the owner of a certain business. 

For more information on using offshore companies to protect your assets, you are welcome to write to the e-address given at the top of this page. 

Why is offshore company registration a sound solution for assets protections?

Any offshore jurisdiction’s legal system provides for the highest protection of foreign investors’ interests, including asset protection. For example, external courts cannot claim the execution of a judgment rendered outside the offshore jurisdiction. Also, an investor can completely separate personal assets from the company’s offshore liabilities.

Which jurisdictions are most attractive for asset protection?

According to the general findings in 2020, the strongest asset protection and financial security environments are provided in Ireland, Nevis, Belize, and the Cook Islands. The Bahamas, BVI, Cyprus, Singapore and several other jurisdictions with zero or low taxation offer equally attractive conditions.

How to increase asset security when registering offshore?

The immediate advice is to use fiduciary services, the second recommendation is to use the services of offshore banks, the third tip is to establish an international offshore trust. The choice of the offshore jurisdiction requires a detailed study to build the best concept for your asset protection and financial security.

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