What Is the Best Offshore Trust Jurisdiction?

Offshore trusts remain one of the most powerful instruments of asset protection. A properly structured trust in a suitable offshore jurisdiction can protect your property, financial assets, and other valuables from fraudsters, unscrupulous competitors, creditors, relatives profuse in expenditure, and foreign courts of law. 

When setting up an offshore trust, it is important to use a jurisdiction whose laws will be in conformity with the main reasons why you want to have a trust. In addition, your home country will also have trust-related regulations that you as the trust beneficiary will have to pay heed to as well.   

When do you need to have an offshore trust?

An offshore trust is used as a managing organization to manage companies, finances, or real estate. The main goal that the offshore trust founders and beneficiaries pursue is asset protection. Depending on the jurisdiction where your offshore trust is registered, it can serve achieving the following particular objectives:

1. Controlling inheritance and avoiding problems with wasteful relatives;
2. Passing the assets to family members with account taken of the risk of divorces and other disputable situations; 
3. Protecting the assets in cases of bankruptcy or legal actions taken by creditors;
4. Lessening the tax burden on international business companies and/ or planning inheritance. Please find out why it is safe and advantageous to set up an offshore trust in Nevis.

Why you should put your assets and your inheritance in a trust

Disputes around trusts arise from time to time in different countries of the world but this organizational form is legal in a vast majority of jurisdictions. As far as the word ‘offshore’ is concerned, it is not associated with money laundering and tax evasion anymore. An offshore jurisdiction is simply a foreign jurisdiction.

The modern trust, including the offshore trust, can be established by one person and managed by another one.

The property owner who wants to protect it can put it in a trust thus transferring the property ownership to the trust. Legally, the person ceases to be the owner of the property: it now belongs to the trust. Depending on the type of the trust (blind trust, discretionary trust, revocable trust, or irrevocable trust), a trust agreement is signed reflecting the terms and conditions on which the trust is established. These include the following ones, among others:

• Who manages the entrusted property and who is entitled for the profits that the trust makes. If you’d like to manage your inheritance, for example, you can set up a trust in an offshore jurisdiction without even visiting it.
• When and how the trustor can regain his/ her property from the trust. Even if you form an irrevocable trust, regaining your property from the trust is absolutely possible.
• How the trust profits are going to be distributed and the trust has several beneficiaries. 

One of the main advantages of setting up a trust in an offshore jurisdiction is the possibility to not to be legally considered the owner of the disposed assets. This opportunity will come especially handy in the course of lawsuits with your creditors as well as in case of divorce.  

Where can the best offshore trust jurisdiction be found?

Structuring your offshore trust in a way that would let it serve your top priorities in the best way is an intricate matter. One of the main factors is choosing the right jurisdiction for your offshore trust.

The choice of the offshore jurisdiction where you can set up a trust will depend not only on your main purposes in creating a trust. The country of your tax residence as well as the trust-related legislation of the host country also matter. Thus, setting up a trust in an offshore jurisdiction takes some planning.

What aspects should you bear in mind when choosing the jurisdiction for your offshore trust?

You cannot just pick any offshore jurisdiction, set up a trust there and transfer your property to the trust. You may risk losing your assets without gaining any benefits. You should take several factors into consideration that include, but are not limited to, the following ones:

• Does the trust-related legislation of the offshore jurisdiction that you are considering suit your purposes in establishing a trust?
• What types of property are you planning to entrust (money, buildings, companies, art objects, inheritance items, and so on)? You have to remember, for example, that real estate that has been put in a trust is subject to the legislation of the jurisdiction where it is located and not to the legislation of the jurisdiction where the trust is registered.
• What is the total value of the property you’d like to put in an offshore trust?
• What are the probabilities that some third parties may take legal action against you? Some offshore jurisdictions will serve people from particular countries especially well. For instance, the Cook Islands and Belize offer the best conditions to citizens of the USA as their trust-related legislations are adapted to the US tax policies. 
• The banks that you cooperate with will also affect the choice of the jurisdiction for your offshore trust.   

Please note that Nevis and Belize provide the best protection from foreign creditors as they disregard court decisions made in other countries. The Cayman Islands, in their turn, is a good jurisdiction to set up hedge funds.

Best jurisdictions to set up offshore trusts

What countries should you consider as possible host jurisdictions for your offshore trust? Depending on your main priorities, you may want to set up a trust in one of the following jurisdictions:

• Belize. Some serious tax benefits (even tax exemptions) are available in the country.
• Cook Islands. A popular offshore jurisdiction to set up trusts and use other asset protection instruments.
• Nevis. One of the best jurisdictions to set up a trust for inheritance planning purposes. As we have also noted above, your assets will be efficiently protected from international creditors in Nevis.
• Cayman Islands. A trust registered in this offshore jurisdiction can last as long as 150 years.
• Luxembourg.
• Jersey.
• Panama.
• British Virgin Islands.

Offshore trusts are for asset protection, not for tax evasion

With an offshore trust, you cannot evade taxes but you can avoid paying some taxes in a legal manner. Suppose you are an average working person and a remote relative leaves you a mansion in his/ her will. If the mansion is huge (and, say, it sits on a large plot of land), the inheritance tax may well be more than you can afford paying. So you will have to sell the mansion just to pay the due inheritance tax. If your deceased relative had put the mansion in a trust and made you the trust beneficiary, you could use the mansion (that is, you could live there) without paying anything in taxes. Prosperous families in Europe in particular, have been using this method of saving on taxes for centuries.

Please write to info@offshore-pro.info if you are interested in establishing a trust in an offshore jurisdiction. The matter is rather intricate and preparation takes time.