Let’s talk about the value of trusts, and deal with the myth that they are available exclusively to the rich.
To estimate the value of trusts for your purposes, we will take into account two following points:
- The cost of making a trust deed;
- The cost of the trust manager’s services and additional costs.
Cost of Establishing a Trust: Ready Trusts
How much a trust will cost depends on the goals that clients have.
There are ready trusts ready that just need to be changed slightly. Such a trust will cost about two to three thousand euro.
Such trusts are always discretionary and irrevocable, i.e. they give the trustee broad rights with respect to an offshore trust.
A ready offshore trust will be suitable for a while if it is necessary to transfer your money to a foreign jurisdiction for working with a foreign broker, for creating a small financial cushion, for getting protected from, for example, subsidiary liability.
But such offshore trusts need to be modified later on. The procedure may prove to be quite expensive. It is also necessary to clearly understand the time for which a trust is established and the consequences it might have.
Special attention should be paid to the clauses on the trust managers’ rights with respect to investment and responsibility for it.
A ready-made offshore trust will be suitable for capital accumulation if you plan to fill it up little by little, for example, to educate your children abroad.
How Much Does a Trust Established for the Client Cost?
A customized trust will be much more expensive, its cost starts from 8,000 euro.
But the trust agreement will specify only your personal terms and conditions and requirements to asset management, beneficiary payments, control conditions and much more.
When establishing a customized trust, all of your concerns, worries, doubts and wishes will be taken into account. Actually, you will get the document with which you will start looking for a trust manager for your specific tasks. The client has the right to demand that the trust deed be observed by the manager. Such a trust usually combines discretionary and fixed positions.
What is the upper limit for an individual offshore (foreign) trust cost? Hardly anyone can answer that exactly. This depends on the involvement of specialists and their hourly rates. For example, the trust asset tax analysis may cost about 30 thousand euro. The analysis of other risks will also cost you dozens of thousands of euro.
In such a trust, each clause and its meaning for you and the beneficiaries will be checked with you.
Annual Maintenance Costs of an Offshore Trust
There are several important points here as well:
- If the trust deed does not specify the costs related to your offshore trust and what is included in them, and you only have a verbal agreement, you can actually have the expenses that might exceed your expectations by several times. It may amount to several dozen thousand euro.
- A fixed value of trust, for example, in 1,000 dollars, may not include communications with the client. All communications will be invoiced separately. As a result, a dozen more will be added to the specified thousand for something that was not necessary.
- No fantasies! It is necessary to clearly stipulate your expenses and the trustee’s consent to them. The prices are certainly rising, but it is better to coordinate them with the trustee than to find it out the post facto.
- If you take an independent protector to control the trustee, you should agree on the terms of your work at the very beginning.
- If you do not want to lose your assets, then prohibit the sale of assets for your debts on payment of the trustee services.
Based on all this, we can give you the approximate prices.
A foreign savings trust: no one does anything with your assets, they are just kept in the deposit, or the trustee invests them in low-risk assets. Such a trust costs from 1,500 euro.
An offshore trust accepting payments from IT, crypto currency or other industries costs from 7,000 euro.
A trust that works with the client’s money as a concierge service can cost from 12,000 euro per year.
A trust for interacting with a foreign broker with a minimum activity of the trustee costs from 3,000 euro (it is possible to link it to the amount of trust assets).
A foreign trust that structures your assets and receives income from different sources costs from 25,000 euro (depending on the size of assets).
An offshore testamentary trust with passive income costs from 6,000 euro.
As you can see, there are formats that allow non-HNWIs to use trusts.
In fact, it is possible to tell the exact amount of your expenses for trust management only based on all terms of the trust agreement, the presence of assets, income from the trust, the tax component, etc. And in general, it depends on the trustee’s decision to take you on as a client.
If there is a savings prospect, the trustee can give you a reduced rate for a while. Please feel free to ask us your questions and learn more. You can also sign up for a consultation at email@example.com.