Offshore Trusts and Asset Protection
Although the controversial treating of offshore trusts, they still can be suggested to be a rational instrument for asset protection.
Offshore trusts are inherently as all stereotypic trusts. The only difference with the classical understanding of trusts is that they are defined under the laws of an offshore jurisdiction.
Offshore centres are popular as places for restructuring of assets’ ownership. One of forms for materialization of this restructuring is the offshore trust. Companies and individuals may transfer their wealth ownership to other legal entities through trusts.
The aim of asset protection is to protect assets of individuals and business entities from civil money judgements. It may help to keep your property harmless from being taken by someone who wins a lawsuit against you.
Specifics of the offshore trust makes them one of most popular tools used in asset protection planning.
Some individuals who are afraid of lawsuits, or outstanding debts may decide to transfer a part of their assets to an “external” entity that holds it outside of their home country (offshore). Rational tax reasons also may be the reason for choosing the offshore trust. For an example, if the trustor is a U.S. resident, their trustor position allows them to make contributions to their offshore trust free of income tax but the trustor still will be obliged to pay tax on the trust’s income.
Referring to the the aforementioned example, it is good to mention that before you make your asset protection plan it is good to make a consultation with an expert. Assets protection and offshore trusts should be understood like an option for a tax efficient form for your wealth management.