Why Going Offshore with Your Foreign Trust to Protect Assets?

A foreign asset protection trust is among the best instruments out there to protect your assets, including, inter alia, shares, accounts, and real estate. By choosing the right offshore trust to protect both you and your assets from unscrupulous legal claims filed by creditors, you secure the highest asset protection level possible. Your assets are safe with offshore trusts, unless you explicitly violate any laws currently in force. Please be advised that foreign trusts come with varying protection levels, ranging from mid-level asset protection to impenetrable one. 

Why is going offshore a smart move to protect your assets?

Taking a trust offshore

Offshore trusts are invulnerable to information disclosure and asset exemption court orders issued by courts in your native country, as offshore trusts are out of local court jurisdiction. FYI: trusts in ordinary jurisdictions may be obliged to follow the like orders issued by general courts.

What are trusts and how do they operate?

A trust deed is an agreement recognized under common law. Thereunder, the settlor transfers their assets under the trustee’s management and conveys the corresponding rights to the latter. The trustee manages the above assets so that to achieve trust goals and objectives, for beneficiaries to profit therefrom. The beneficiaries, i.e., certain individuals or groups, shall be named by the settlor in the trust deed.  

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NB: after the assets have been transferred to the above trust, the Settlor no longer has title thereto.  Since that moment on, they have been owned by the trust. In real-world context, it means although creditors may file a claim against the Settlor the latter won’t be entitled to give the disputed assets away as they belong to the Settlor no longer.

Ordinary trusts and their weak points

You may incorporate a trust in common law jurisdictions, e.g., the United Kingdom or the USA. To a certain degree, the said trusts will protect your assets from attempts to encroach them. 

Still, the above ordinary trusts come with a variety of pain points and limitations. A settlor thereof may transfer their assets to the trust but has no right to become a trust beneficiary and neither have their family members. Elsewise, such a settlor would be considered a controlling asset owner.   

The second stumbling block is that local trusts comply with local laws and court rulings. As logical as it may sound, existing legal precedents indicate that as soon as the court rules the trustee shall transfer the assets in question to the person named in the court order, any asset protection granted by the trust is gone. The court may order the protector to do the same. Although appointed to protect your interests, the protector may become a weak link in a trust structure.

Combining an offshore trust and an LLC established to own assets for the trust can be helpful, yet even in this case certain additional terms and conditions shall be met. The LLC in question shall have several members and extra structures to support its operations. With the above preventive measures, judicial restraint issues are  still unavoidable for ordinary trusts.

Unlike them, foreign asset protection trusts secure ultimate protection for your wealth.

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Offshore trust plus points

In terms of offshore trusts, 2 jurisdictions have the highest significance, namely, the Cook Islands and Nevis. The International Wealth seasoned industry pros recommend you decide in favor of the latter as it comes with the same conditions yet more affordable prices.

The benefits you will enjoy are obvious: 

  1. Trust settlors may alongside with that be trust beneficiaries, likewise their relatives and family members. Beneficiaries may be listed in a trust deed as a group and not by names, e.g., all settlor’s successors and/or lawful heirs, all adult beneficiaries, one’s cousin’s grandchildren, the Darwin or the Nobel Award winners. 

Any beneficiary groups may be named therein, both allied and not allied. As a settlor, you decide who, how, and when receives the corresponding benefits. Trustees, at the same time, shall act under the trust deed and do any things provided thereunder.

  1. Nevis offshore trusts do not recognize foreign court decisions, and local courts guard the interests of and advocate for trusts and entrepreneurs and not creditors.

Offshore jurisdictions profit from foreign trusts. The latter enjoy the most beneficial terms and conditions therein. Creditors may seamlessly lodge a claim in a London or a New York court, win the lawsuit, and come out of it empty-handed as local Nevis courts downright do not comply with foreign court orders. 

The next step for creditors is to go to a local Nevis court. There, claimants will have to make a USD 100,000 judiciary deposit, hire local lawyers, lodge individual claims as no group claims are allowed in Nevis, and deal with the Nevis laws that protect trusts. 

You can make 2 major mistakes by either trying to transfer your assets to a trust after charges against you have been brought. Seen as a brush with the law, it results in legal prosecution. The second mistake is to select a protector resident in the jurisdiction whose courts may oblige the above protector to act against your best interests. 

Timely trust incorporation and asset transfer thereto is an effective way to protect yourself from the former, while trust rules partially guard you in the latter case. The trustee may refuse to follow any requirements that contradict your interests or objectives while the protector may reject the trustee’s decision where the latter is contrary to trust goals.

The fact that Nevis trusts may be tax exempt is a nice bonus thereto. In the latter case, Nevis trusts serve both as a part of your estate and your asset protection strategy.

Terms set to incorporate an offshore trust and protect your assets

Several terms and conditions shall be followed for your trust to indeed protect both your assets and interests:

  • Settlor sets up a foreign trust in an offshore jurisdiction like Nevis or the Cook Islands
  • Trustee nominates a Nevis-incorporated company (be it your company or your corporate trustee)
  • Protector comes from a jurisdiction whose courts have no powers to oblige the protector to act against your interests
  • You place your assets in trust well in advance and in any case before your creditors have a chance to lodge any claims
  • In Nevis, you may withdraw your assets from a trust within 1 to 2 years, while in other jurisdictions the term makes 5 years. After expiry thereof, asset withdrawal gets highly challenging or even impossible both in Nevis and the other jurisdictions
  • Your trust deed shall be duly prepared to suit your interests. The International Wealth lawyers and industry experts recommend you hire accomplished pros therefor that are highly experienced in Nevis trusts.

Feel free to contact such experts at info@offshore-pro.info. At International Wealth, our team members are here to offer you the most efficient asset protection and the best wealth management strategies available on the market today.

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